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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- Todd M. Schmit & J. Carlos Reberte & Harry M. Kaiser, 1997.
"An economic analysis of generic egg advertising in California, 1985-1995,"
John Wiley & Sons, Ltd., vol. 13(4), pages 365-373.
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- Ferrero, Jennifer L. & Boon, Leen & Kaiser, Harry M. & Forker, Olan D., 1996. "Annotated Bibliography of Generic Commodity Promotion Research," Research Bulletins 122819, Cornell University, Department of Applied Economics and Management.
- 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.
- 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.
- 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.
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