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Optimal Advertising Levies with Application to the Norway-EU Salmon Agreement

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  • Kinnucan, Henry W
  • Myrland, Oystein

Abstract

This paper focuses on optimal advertising policy for a competitive industry that produces large tradable surpluses and raises funds for promotion through per-unit levies on production or exports. Results indicate that an export levy biases the advertising budget allocation in favour of the export market, but provides no clear incentive to intensify advertising effort. Applying the model to the Norway-EU Salmon Agreement, results suggest that the current 3 per cent levy may be welfare-increasing from the Norwegian producer perspective. Whether the current budget allocation of 67 per cent to the EU is efficient depends critically on whether advertising elasticities across markets are uniform, a hypothesis that needs to be tested. Copyright 2000 by Oxford University Press.

Suggested Citation

  • Kinnucan, Henry W & Myrland, Oystein, 2000. "Optimal Advertising Levies with Application to the Norway-EU Salmon Agreement," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(1), pages 39-57, March.
    • Handle: RePEc:oup:erevae:v:27:y:2000:i:1:p:39-57
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    Cited by:

    1. Henry Kinnucan & Øystein Myrland, 2005. "Effects of income growth and tariffs on the world salmon market," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1967-1978.
    2. J. A. L. Cranfield, 2003. "Optimal Collective Investment in Generic Advertising, Export Market Promotion and Cost-of-Production-Reducing Research," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(3), pages 299-321, November.
    3. Williams, Gary W. & Capps Jr., Oral, 2020. "Generic promotion of Norwegian seafood exports," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 23(3), August.
    4. Frank Asche & Subal C. Kumbhakar & Ragnar Tveterås, 2007. "Testing cost vs. profit function," Applied Economics Letters, Taylor & Francis Journals, vol. 14(10), pages 715-718.
    5. 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.
    6. 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, July.
    7. Frank Asche & Atle G. Guttormsen & Tom Sebulonsen & Elin H. Sissener, 2005. "Competition between farmed and wild salmon: the Japanese salmon market," Agricultural Economics, International Association of Agricultural Economists, vol. 33(3), pages 333-340, November.
    8. Freebairn, John W. & Alston, Julian M., 2001. "Generic advertising without supply control: implications of funding mechanisms for advertising intensities in competitive industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(1), pages 1-29.
    9. Chanjin Chung & Youg Sook Eom & Byung Woo Yang, 2014. "Optimal Generic Advertising under Bilateral Imperfect Competition between Processors and Retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 30(4), pages 438-455, September.
    10. Guettler, Stefan & Seidel-Lass, Linda & Mueller, Rolf A.E., 2011. "Simulating the Spillover Benefits from R&D by a small producer country embedded in a Network: Aquaculture R&D in Germany," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114589, European Association of Agricultural Economists.
    11. Frank Asche & Shabbar Jaffry & Jessica Hartmann, 2007. "Price transmission and market integration: vertical and horizontal price linkages for salmon," Applied Economics, Taylor & Francis Journals, vol. 39(19), pages 2535-2545.
    12. Guettler, Stefan & Seidel-Lass, Linda & Mueller, Rolf A.E., 2012. "Simulating the spillover benefits from R&D by a small producer country embedded in a co-authorship network: Aquaculture R&D in Germany," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 122885, International Association of Agricultural Economists.
    13. Myrland, Oystein & Dong, Diansheng & Kaiser, Harry M., 2003. "Price and Quality Effects of Generic Advertising: The Case of Norwegian Salmon," Research Bulletins 122112, Cornell University, Department of Applied Economics and Management.
    14. Freebairn, John W. & Goddard, Ellen W. & Griffith, Garry R., 2005. "When Can a Generic Advertising Program Increase Farmer Returns?," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    15. Williams, Gary W. & Capps, Jr., Oral, 2022. "The apparent conflict of Norwegian pelagic fisheries management and Norwegian seafood council export promotion," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 25(3), February.

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