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Generic Product Advertising, Spillovers, and Market Concentration

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  • George Norman
  • Lynne Pepall
  • Dan Richards

Abstract

We examine the decision to advertise a homogenous good. We show that the likelihood of inefficiently low advertising rests heavily on how one models the mechanism by which advertising affects demand. Regardless of this mechanism, however, there is always a lower bound of concentration below which no advertising occurs even when welfare-enhancing. In such cases, mandatory programs will raise welfare if they induce entry, although producer surplus may decline. Our model also provides an explanation for the stylized fact that advertising intensity first rises and then falls as concentration increases. Copyright 2008, Oxford University Press.

Suggested Citation

  • George Norman & Lynne Pepall & Dan Richards, 2008. "Generic Product Advertising, Spillovers, and Market Concentration," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 719-732.
  • Handle: RePEc:oup:ajagec:v:90:y:2008:i:3:p:719-732
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2008.01133.x
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    Cited by:

    1. Pedro Gomis-Porqueras & Benoit Julien & Chengsi Wang, 2010. "Pricing, Advertising, and Market Structure with Frictions," Discussion Papers 2010-20, School of Economics, The University of New South Wales.
    2. repec:kap:revind:v:51:y:2017:i:1:d:10.1007_s11151-016-9541-0 is not listed on IDEAS
    3. Demont, Matty & Rutsaert, Pieter & Ndour, Maimouna & Verbeke, Wim, 2013. "Reversing Urban Bias in African Rice Markets: Evidence from Senegal," World Development, Elsevier, vol. 45(C), pages 63-74.
    4. Menapace, Luisa, 2010. "Geographical indications and quality promotion in food and agricultural markets: domestic and international issues," ISU General Staff Papers 201001010800002558, Iowa State University, Department of Economics.

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