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The Procompetitive Effect of Demand-Enhancing Check-Off Programs

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  • John M. Crespi
  • Stéphan Marette

Abstract

This article explores demand-enhancing check-off programs and how such programs may influence both private programs as well as industry market structure. Under duopoly, a firm may increase its sales through privately funding product quality improvements. However, such endogenous sunk costs may also be used to exclude a rival. Industry-funded check-off programs affect firms’ strategies and can be procompetitive. The rationale lies not only in how the check-off enhancement is perceived by consumers but also in the way the check-off’s crowding-out effect reduces the ability of a firm to use its private expenditures to bar a rival’s market access. Copyright 2007, Oxford University Press.

Suggested Citation

  • John M. Crespi & Stéphan Marette, 2007. "The Procompetitive Effect of Demand-Enhancing Check-Off Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 389-401.
    • Handle: RePEc:oup:ajagec:v:91:y:2007:i:2:p:389-401
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2009.01254.x
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    Cited by:

    1. Marette, Stephan, 2017. "Quality, market mechanisms and regulation in the food chain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(3), February.
    2. 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.

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