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Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs

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  • Julian M. Alston
  • John W. Freebairn
  • Jennifer S. James

Abstract

Profits from generic advertising by a producer group often come partly at the expense of producers of closely related commodities. The resulting tendency toward excessive advertising is exacerbated by check-off funding. To analyze this beggar-thy-neighbor behavior we compare a scenario where different producer groups cooperate and choose their advertising expenditures jointly to maximize the sum of profits across the groups, and a scenario where they optimize independently. In an illustrative example using 1998 data for U.S. beef and pork, the noncooperatively chosen expenditure on beef and pork advertising is more than three times the cooperative optimum. Copyright 2001, Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ajagec:v:83:y:2001:i:4:p:888-902
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    File URL: http://hdl.handle.net/10.1111/0002-9092.00217
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    Cited by:

    1. Jeffrey Hyde & Brent Gloy, 2007. "Dynamic strategic responses among advertisers: the case of meat products," Economics Bulletin, AccessEcon, vol. 13(3), pages 1-14.
    2. Subhadip Chakrabarti & Hans Haller, 2011. "An Analysis Of Advertising Wars," Manchester School, University of Manchester, vol. 79(1), pages 100-124, January.
    3. Hunnicutt, Lynn & Israelsen, L. Dwight, 2003. "Incentives to Advertise and Product Differentiation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(03), December.
    4. Goddard, Ellen W. & Freebairn, John W. & Griffith, Garry R., 2003. "Issues in evaluating generic promotion in the food chain," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57871, Australian Agricultural and Resource Economics Society.
    5. Metin Cakir & Joseph V. Balagtas, 2010. "Econometric evidence of cross-market effects of generic dairy advertising," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 83-99.
    6. Collart, Alba J. & Palma, Marco A. & Carpio, Carlos E., 2013. "Consumer Response to Point of Purchase Advertising for Local Brands," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 45(02), pages 229-242, May.
    7. Henry W. Kinnucan & Øystein Myrland, 2002. "The Relative Impact of the Norway-EU Salmon Agreement: a Mid-term Assessment," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 195-219.
    8. Peter Scott & James Walker, 2010. "Sales and Advertising Rivalry in Interwar US Department Stores," Economics & Management Discussion Papers em-dp2009-05, Henley Business School, Reading University.
    9. John M. Crespi & Stéphan Marette, 2003. "Are uniform assessments for generic advertising optimal if products are differentiated?," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 367-377.
    10. Yasunori Ishii, 2013. "Special Issue. Guest Editor: Zhihao Yu," Review of Development Economics, Wiley Blackwell, vol. 17(3), pages 571-584, August.
    11. Julian M. Alston & John W. Freebairn & Jennifer S. James, 2003. "Distributional issues in check-off funded programs," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 277-287.
    12. Zheng, Yuqing & Kaiser, Harry M., 2008. "Advertising and U. S. Nonalcoholic Beverage Demand," Agricultural and Resource Economics Review, Cambridge University Press, vol. 37(02), pages 147-159, October.
    13. Capacci, Sara & Mazzocchi, Mario, 2011. "Five-a-day, a price to pay: An evaluation of the UK program impact accounting for market forces," Journal of Health Economics, Elsevier, vol. 30(1), pages 87-98, January.
    14. Peyton Ferrier & Chen Zhen, 2014. "The producer welfare effects of trade liberalization when goods are perishable and habit-forming: the case of asparagus," Agricultural Economics, International Association of Agricultural Economists, vol. 45(2), pages 129-141, March.
    15. Rickard, Bradley J. & Liaukonyte, Jura & Kaiser, Harry M. & Richards, Timothy J., 2010. "Examining consumer response to commodity-specific and broad-based promotion programs for fruits and vegetables using experimental economics," Working Papers 126965, Cornell University, Department of Applied Economics and Management.
    16. Kinnucan, Henry W. & Myrland, Oystein, 2002. "Relationship Between Partial and Total Responses to Advertising with Application to U.S. Meats," Research Bulletins 122634, Cornell University, Department of Applied Economics and Management.
    17. repec:ebl:ecbull:v:13:y:2007:i:3:p:1-14 is not listed on IDEAS
    18. Aust, Gerhard & Buscher, Udo, 2014. "Cooperative advertising models in supply chain management: A review," European Journal of Operational Research, Elsevier, vol. 234(1), pages 1-14.
    19. Crespi, John M. & James, Jennifer S., 2007. "Bargaining rationale for cooperative generic advertising," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), December.
    20. Gunderson, Michael A. & Lusk, Jayson L. & Norwood, F. Bailey, 2005. "Getting Something From Nothing: An Investigation of Beef Demand Expansion and Substitution in the Presence of Quality Heterogeneity," 2005 Annual meeting, July 24-27, Providence, RI 19465, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. Herrmann, Roland & Anders, Sven M. & Thompson, Stanley R., 2005. "Übermäßige 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).
    22. Lee L. Schulz & John M. Crespi, 2012. "Presence of Check‐Off Programs and Industry Concentration in the Food Manufacturing Sector," Agribusiness, John Wiley & Sons, Ltd., vol. 28(2), pages 148-156, March.
    23. Requena-Silvente, Francisco & Walker, James, 2007. "Investigating sales and advertising rivalry in the UK multipurpose vehicle market (1995-2002)," Journal of Economics and Business, Elsevier, vol. 59(2), pages 163-180.
    24. Cardon, James H. & Pope, Rulon D., 2003. "Agricultural Market Structure, Generic Advertising, and Welfare," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(02), August.
    25. Brenda L. Boetel & Donald J. Liu, 2003. "Evaluating the effect of generic advertising and food health information within a meat demand system," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 345-354.

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