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Optimal Institutional Mechanisms for Funding Generic Advertising: An Experimental Analysis

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  • Kent D. Messer
  • Todd M. Schmit
  • Harry M. Kaiser

Abstract

Given the uncertain legal status of generic advertising programs for agricultural commodities, alternative voluntary funding institutions are investigated that could provide a high level of benefits to producers. This experimental study simulates key economic and psychological factors that affect voluntary producer contributions to generic advertising. The results suggest that producer referenda play a critical role in increasing contributions and that producer surplus is maximized by a provision point mechanism instituted by producer referendum with thresholds ranging from 68% to 90%, and expected funding from 47% to 77% of the time, depending on the level of advertising effectiveness. Copyright 2005, Oxford University Press.

Suggested Citation

  • Kent D. Messer & Todd M. Schmit & Harry M. Kaiser, 2005. "Optimal Institutional Mechanisms for Funding Generic Advertising: An Experimental Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1046-1060.
    • Handle: RePEc:oup:ajagec:v:87:y:2005:i:4:p:1046-1060
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2005.00787.x
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    Cited by:

    1. Swallow, Stephen K., 2013. "Demand-side Value for Ecosystem Services and Implications for Innovative Markets: Experimental Perspectives on the Possibility of Private Markets for Public Goods," Agricultural and Resource Economics Review, Cambridge University Press, vol. 42(1), pages 33-56, April.
    2. Glenn Bush & Nick Hanley & Mirko Moro & Daniel Rondeau, 2013. "Measuring the Local Costs of Conservation: A Provision Point Mechanism for Eliciting Willingness to Accept Compensation," Land Economics, University of Wisconsin Press, vol. 89(3), pages 490-513.
    3. Velez, Maria Alejandra & Murphy, James J. & Stranlund, John K., 2006. "Within and Between Group Variation of Individual Strategies in Common Pool Resources: Evidence from Field Experiments," Working Paper Series 14504, University of Massachusetts, Amherst, Department of Resource Economics.
    4. Newell, Laurie W. & Swallow, Stephen K., 2013. "Real-payment choice experiments: Valuing forested wetlands and spatial attributes within a landscape context," Ecological Economics, Elsevier, vol. 92(C), pages 37-47.
    5. Kent D. Messer & Harry M. Kaiser & Gregory L. Poe, 2007. "Voluntary Funding for Generic Advertising Using a Provision Point Mechanism: An Experimental Analysis of Option Assurance," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(3), pages 612-631.
    6. Just, David R. & Messer, Kent D., 2025. "The Behavioral Revolution in Agricultural and Resource Economics: A Perspective on the Past and the Future," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 50(4), December.
    7. Yuanfang Lin & Sandeep Krishnamurthy, 2017. "Generic and Brand Advertising Strategies Under Inter-Industry Competition," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 4(1), pages 18-27, September.
    8. Groothuis, Peter A. & Whitehead, John C., 2009. "The Provision Point Mechanism and Scenario Rejection in Contingent Valuation," Agricultural and Resource Economics Review, Cambridge University Press, vol. 38(2), pages 271-280, October.
    9. Matsushima, Noriaki & Shinohara, Ryusuke, 2019. "Pre-negotiation commitment and internalization in public good provision through bilateral negotiations," Journal of Public Economics, Elsevier, vol. 175(C), pages 84-93.
    10. Amir, Rabah & Machowska, Dominika & Troege, Michael, 2021. "Advertising patterns in a dynamic oligopolistic growing market with decay," Journal of Economic Dynamics and Control, Elsevier, vol. 131(C).
    11. Messer, Kent D. & Zarghamee, Homa & Kaiser, Harry M. & Schulze, William D., 2007. "New hope for the voluntary contributions mechanism: The effects of context," Journal of Public Economics, Elsevier, vol. 91(9), pages 1783-1799, September.
    12. Janusch, Nicholas & Palm-Forster, Leah H. & Messer, Kent D. & Ferraro, Paul J., "undated". "Behavioral Insights for Agri-Environmental Program and Policy Design," 2018 Allied Social Sciences Association (ASSA) Annual Meeting, January 5-7, 2018, Philadelphia, Pennsylvania 266299, Agricultural and Applied Economics Association.

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