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Optimal Commodity Promotion In Imperfectly Competitive Markets

  • Zhang, Mingxia
  • Sexton, Richard J.
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    We investigate the optimal collection and expenditure of funds for agricultural commodity promotion in markets where the processing and distribution sectors may exhibit oligopoly and/or oligopsony power. The conditions that characterize optimal advertising intensity under perfect competition for funds generated from either per-unit or lump-sum taxes do not, in general, hold when marketing is imperfectly competitive. Simulation analyses show that imperfect competition always reduces farmers’' optimal advertising expenditure and that an imperfectly competitive marketing sector may capture half or more of the benefits from the funds that are expended.

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    File URL: http://purl.umn.edu/21823
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    Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2000 Annual meeting, July 30-August 2, Tampa, FL with number 21823.

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    Date of creation: 2000
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    Handle: RePEc:ags:aaea00:21823
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    1. Stephen F. Hamilton & David Sunding, 1998. "Returns to Public Investments in Agriculture with Imperfect Downstream Competition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 830-838.
    2. E. W. Goddard & M. L. McCutcheon, 1993. "Optimal Producer Investment in Generic Advertising: The Case of Fluid Milk in Ontario and Quebec," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 41(3), pages 329-347, November.
    3. Mingxia Zhang, 1997. "The Effects of Imperfect Competition on the Size and Distribution of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1252-1265.
    4. Henry W. Kinnucan & Yuliang Miao, 2000. "Distributional Impacts of Generic Advertising on Related Commodity Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 672-678.
    5. Alston, Julian M. & Chalfant, James A. & Christian, Jason E. & Meng, Erika C.H. & Piggott, Nicholas E., 1997. "The California Table Grape Commission's Promotion Program: An Evaluation," Monographs, University of California, Davis, Giannini Foundation, number 11932.
    6. George C. Davis, 1999. "The science and art of promotion evaluation," Agribusiness, John Wiley & Sons, Ltd., vol. 15(4), pages 465-483.
    7. Alston, Julian M. & Carman, Hoy F. & Chalfant, James A. & Crespi, John M. & Sexton, Richard J. & Venner, Raymond J., 1998. "The California Prune Board's Promotion Program: An Evaluation," Research Reports 11926, University of California, Davis, Giannini Foundation.
    8. John A. L. Cranfield & Ellen W. Goddard, 1999. "Open Economy and Processor Oligopoly Power Effects of Beef Advertising in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(1), pages 1-19, 03.
    9. Nicholas E. Piggott, 2000. "The Incidence of the Costs and Benefits of Generic Advertising," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 665-671.
    10. Gasmi, F & Laffont, J J & Vuong, Q, 1992. "Econometric Analysis of Collusive Behavior in a Soft-Drink Market," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(2), pages 277-311, Summer.
    11. Azzam, Azzeddine M. & Schroeter, John R., 1991. "Implications Of Increased Regional Concentration And Oligopsonistic Coordination In The Beef Packing Industry," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(02), December.
    12. Nouhoun Coulibaly & B. Wade Brorsen, 1999. "Explaining the differences between two previous meat generic advertising studies," Agribusiness, John Wiley & Sons, Ltd., vol. 15(4), pages 501-515.
    13. Chanjin Chung & Harry M. Kaiser, 2000. "Distribution of Generic Advertising Benefits Across Participating Firms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 659-664.
    14. Henry W. Kinnucan, 1999. "Optimal Generic Advertising Decisions in Supply-managed Industries: Clarification and Some Further Results," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 47(1), pages 57-66, 03.
    15. Philip L. Paarlberg & John G. Lee, 2001. "U.S. Trade Policy on Lamb Meat: Who Gets Fleeced?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(1), pages 196-208.
    16. Chung, Chanjin & Kaiser, Harry M., 2000. "Do Farmers Get An Equal Bang For Their Buck From Generic Advertising Programs? A Theroetical And Empirical Analysis," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(01), July.
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