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Übermäßige Werbung und Marktsegmentierung durch staatliche Förderung der Regionalvermarktung: Eine theoretische Analyse

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  • Herrmann, Roland
  • Anders, Sven M.
  • Thompson, Stanley R.

Abstract

The protection of the regional origin of foods is a major part of the food-quality policy in the EU. It is the objective of this article to analyze economic effects of such policy instruments. Two different types of policy are distinguished which are both designed to promote regional products. First, generic promotion of a homogeneous commodity at the national and/or regional level in the spirit of NERLOVE and WAUGH is investigated. This instrument aims at shifting the demand for the advertised commodity outward. We derive theoretically that excessive advertising does exist if several promotion activities at different regional levels exist at one time. It would be more cost-effective due to product substitutability to move from separate strategies at the level of states to a coordinated uniform generic promotion. Secondly, there is support in the EU for regional-origin labels which combine quality assurance with the regional label. Product heterogeneity arises here when regional products reach above-average quality and prices increase. A segmented market model is utilized to show that the price bonus is affected by the magnitude of promotion expenditures, by own – and cross-price advertising elasticities on the markets and by marginal costs of program participation.

Suggested Citation

  • Herrmann, Roland & Anders, Sven M. & Thompson, Stanley R., 2005. "Ãœbermäßige Werbung und Marktsegmentierung durch staatliche Förderung der Regionalvermarktung: Eine theoretische Analyse," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 54(3).
  • Handle: RePEc:ags:gjagec:97214
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    References listed on IDEAS

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    1. Johan F. M. Swinnen & Jill McCluskey & Nathalie Francken, 2005. "Food safety, the media, and the information market," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 175-188, January.
    2. Gary S. Becker & Kevin M. Murphy, 1993. "A Simple Theory of Advertising as a Good or Bad," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 941-964.
    3. Harry M. Kaiser & Todd M. Schmit, 2003. "Distributional effects of generic dairy advertising throughout the marketing channel," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 289-300.
    4. 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.
    5. 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.
    6. Herrmann Roland & Moeser Anke & Weber Sascha Alexander, 2005. "Price Rigidity in the German Grocery-Retailing Sector: Scanner-Data Evidence on Magnitude and Causes," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 3(1), pages 1-37, February.
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