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Advertising, Collective Action, And Labeling In The European Wine Markets

  • Marette, Stephan
  • Zago, Angelo M.

In this paper we consider the role for collective action in advertising investments needed to compete on foreign markets and/or to enter into new markets. We model the choices facing producers in regions where both AO (high quality) and table (low quality) wines are produced. By joining forces with producers of other regions to invest in advertising, producers may penetrate into new markets. We show that it is profitable to enter into the new markets when, other things being equal, the size of the new market is relatively big, when the traditional market is relatively small, and when the size of the fixed investment in advertising is relatively small. We discuss the policy implications of the results, examining possible modifications of the AO system to facilitate collective action and improve investment levels.

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File URL: http://purl.umn.edu/27049
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Article provided by Food Distribution Research Society in its journal Journal of Food Distribution Research.

Volume (Year): 34 (2003)
Issue (Month): 03 (November)
Pages:

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Handle: RePEc:ags:jlofdr:27049
Contact details of provider: Web page: http://fdrs.ag.utk.edu/

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  1. James L. Seale & Mary A. Marchant & Alberto Basso, 2003. "Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 187-202.
  2. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  3. Luis Cabral, 2000. "Stretching Firm and Brand Reputation," Working Papers 00-07, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Sullivan, Mary, 1990. "Measuring Image Spillovers in Umbrella-Branded Products," The Journal of Business, University of Chicago Press, vol. 63(3), pages 309-29, July.
  5. Wittwer, Glyn & Berger, Nick & Anderson, Kym, 2003. "A model of the world's wine markets," Economic Modelling, Elsevier, vol. 20(3), pages 487-506, May.
  6. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr.
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