Advertising Traded Goods
Nerlove and WaughÂ’'s theory of cooperative (generic) advertising is extended to the case of traded goods. Results suggest that trade reduces the incentive to promote by enlarging the effective supply or demand elasticity facing the industry. This is especially true in the net exporter situation where the enlarged demand elasticity (relative to the autarky case) limits the ability to shift advertising costs onto consumers. Simulations of the model using data and parameter values for the California egg industry suggest that ignoring trade prejudices benefit-cost ratios in favor of the promotion program. The upward bias, moreover, is significant even when the trade share is modest.
Volume (Year): 24 (1999)
Issue (Month): 01 (July)
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- Kinnucan, Henry W. & Christian, Jason E., 1997. "A Method For Measuring Returns To Nonprice Export Promotion With Application To Almonds," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(01), July.
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- Todd M. Schmit & J. Carlos Reberte & Harry M. Kaiser, 1997.
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John Wiley & Sons, Ltd., vol. 13(4), pages 365-373.
- Schmit, Todd M. & Reberte, J. Carlos & Kaiser, Harry M., 1996. "An Economic Analysis of Generic Egg Advertising in California, 1985-1995," Research Bulletins 122834, Cornell University, Department of Applied Economics and Management.
- Goddard, Ellen W. & Conboy, Paula, 1993. "Optimal International Promotion Expenditure for Differentiated Products," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 61(01), April.
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- 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.
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