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Minimum effective scale in export promotion

Author

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  • Timothy J. Richards

    (Arizona State University East, Morrison School of Agribusiness and Resource Management, Mail Code 0180, 7001 East Williams Field Road, Bldg. 20, Mesa, AZ 85212. E-mail: trichards@asu.edu)

  • Paul M. Patterson

    (Arizona State University East, Morrison School of Agribusiness and Resource Management, Mail Code 0180, 7001 East Williams Field Road, Bldg. 20, Mesa, AZ 85212. E-mail: trichards@asu.edu)

Abstract

Nonprice promotion has long been used by small firms or organizations to increase agricultural exports. Some believe that export promotion in these cases is often unsuccessful as the promoter is unable to achieve the “critical mass” of awareness that is required for success. The objective of this article is to develop a theoretical explanation for the likely existence of minimum expenditure thresholds and to estimate their size using an econometric model of the optimal supply of advertising. An empirical example of apple promotion from Washington state (USA) finds minimum effective scale levels for four key promotion activities among several Latin American countries.[EconLit citations: C34, M37, Q17]. © 2002 Wiley Periodicals, Inc.

Suggested Citation

  • Timothy J. Richards & Paul M. Patterson, 2002. "Minimum effective scale in export promotion," Agribusiness, John Wiley & Sons, Ltd., vol. 18(4), pages 523-541.
  • Handle: RePEc:wly:agribz:v:18:y:2002:i:4:p:523-541 DOI: 10.1002/agr.10036
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    References listed on IDEAS

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    1. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-793, May.
    2. Richard Baldwin & Paul Krugman, 1989. "Persistent Trade Effects of Large Exchange Rate Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 104(4), pages 635-654.
    3. Solomon, H. & Kinnucan, Henry W., 1993. "Effects Of Non-Price Export Promotion: Some Evidence For Cotton," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 37(01), April.
    4. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    5. Ehrlich, Isaac & Fisher, Lawrence, 1982. "The Derived Demand for Advertising: A Theoretical and Empirical Investigation," American Economic Review, American Economic Association, vol. 72(3), pages 366-388, June.
    6. Kinnucan, Henry W. & Xiao, Hui & Yu, Shixue, 2000. "Relative Effectiveness Of Usda'S Nonprice Export Promotion Instruments," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
    7. Timothy J. Richards & Pieter. Van Ispelen & Albert Kagan, 1997. "A Two-Stage Analysis of the Effectiveness of Promotion Programs for U.S. Apples," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 825-837.
    8. Azzeddine M. Azzam, 1999. "Asymmetry and Rigidity in Farm-Retail Price Transmission," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 525-533.
    9. Richard W. Blundell & Richard J. Smith, 1989. "Estimation in a Class of Simultaneous Equation Limited Dependent Variable Models," Review of Economic Studies, Oxford University Press, vol. 56(1), pages 37-57.
    10. Avinash Dixit, 1992. "Investment and Hysteresis," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 107-132, Winter.
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    Cited by:

    1. Lee, In Hyeock & Rugman, Alan M., 2012. "Firm-specific advantages, inward FDI origins, and performance of multinational enterprises," Journal of International Management, Elsevier, vol. 18(2), pages 132-146.

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