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Relationship Between Partial and Total Responses to Advertising with Application to U.S. Meats

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Author Info

  • Kinnucan, Henry W.
  • Myrland, Oystein

Abstract

Buse’s concept of total response is extended to advertising effects. Results suggest that partial advertising elasticities overstate advertising’s ability to increase market demand. One implication is that advertising bans (e.g., for alcohol and tobacco) are apt to be less effective than indicated by partial advertising elasticities estimated from econometric models. Extending the concept of total response to price effects, the total advertising “flexibility” sets the lower bound on the optimal advertising-sales ratio and subsumes the Dorfman-Steiner and Nerlove-Waugh theorems as special cases. Applying the total flexibility concept to U.S. meats, results suggest the beef, pork and poultry industries are under-investing in advertising. However, in the case of beef this conclusion hinges on the assumption that retaliation by pork brand advertisers is minimal, which needs to be tested.

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Bibliographic Info

Paper provided by Cornell University, Department of Applied Economics and Management in its series Research Bulletins with number 122634.

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Date of creation: Apr 2002
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Handle: RePEc:ags:cudarb:122634

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Related research

Keywords: advertising bans; Dorfman-Steiner theorem; generic advertising; total elasticities; Livestock Production/Industries; Marketing;

References

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  1. John D. Jackson, 1997. "Effects of Health Information and Generic Advertising on U.S. Meat Demand," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 13-23.
  2. Henry Saffer, 1989. "Alcohol Advertising Bans and Alcohol Abuse: An International Perspective," NBER Working Papers 3052, National Bureau of Economic Research, Inc.
  3. H. W. Kinnucan, 1996. "A Note On Measuring Returns To Generic Advertising In Interrelated Markets," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 261-267.
  4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  5. Chanjin Chung & Harry M. Kaiser, 1999. "Distribution of Gains from Research and Promotion in Multistage Production Systems: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 593-597.
  6. Elitzak, Howard, 1999. "Food Cost Review, 1950-97," Agricultural Economics Reports 34053, United States Department of Agriculture, Economic Research Service.
  7. Julian M. Alston & John W. Freebairn & Jennifer S. James, 2001. "Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 888-902.
  8. Kinnucan, Henry W., 1999. "Advertising Traded Goods," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(01), July.
  9. Timothy J. Richards & Pieter. Van Ispelen & Albert Kagan, 1997. "A Two-Stage Analysis of the Effectiveness of Promotion Programs for U.S. Apples," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 825-837.
  10. E.W. Goddard & A. Tielu, 1988. "Assessing the Effectiveness of Fluid Milk Advertising in Ontario," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 36(2), pages 261-278, 07.
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