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Optimal Generic Advertising under Bilateral Imperfect Competition between Processors and Retailers

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  • Chung, Chanjin
  • Eom, Young Sook
  • Yang, Byung Woo
  • Han, Sungill

Abstract

The purpose of this paper is to examine the impact of bilateral imperfect competition between processors and retailers and of import supply on optimal advertising intensity, advertising expenditures, and checkoff assessment rates. First, comparative static analyses were conducted on the newly developed optimal advertising intensity formula. Second, to consider the endogenous nature of optimal advertising, a linear market equilibrium model was developed and applied to the U.S. beef industry. Results showed that the full consideration of retailer-processor bilateral market power lowered the optimal values of assessment rates, advertising expenditures, and advertising intensity for the checkoff board while consideration of importers increases the optimal values. The results indicate that ignoring the import sector in optimal generic advertising modeling should underestimate these optimal values, while ignoring the bilateral market power between processors and retailers overestimates the values.

Suggested Citation

  • Chung, Chanjin & Eom, Young Sook & Yang, Byung Woo & Han, Sungill, 2013. "Optimal Generic Advertising under Bilateral Imperfect Competition between Processors and Retailers," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149582, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:149582
    DOI: 10.22004/ag.econ.149582
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    Cited by:

    1. Maes, Dries & Vancauteren, Mark & Van Passel, Steven, 2019. "Investigating market power in the Belgian pork production chain," Review of Agricultural, Food and Environmental Studies, Institut National de la Recherche Agronomique (INRA), vol. 100(01-4), November.
    2. Dries Maes & Mark Vancauteren & Steven Van Passel, 2019. "Investigating market power in the Belgian porkproduction chain," Review of Agricultural, Food and Environmental Studies, INRA Department of Economics, vol. 100(1-4), pages 93-117.
    3. Dries Maes & Mark Vancauteren & Steven Passel, 2019. "Investigating market power in the Belgian pork production chain," Review of Agricultural, Food and Environmental Studies, Springer, vol. 100(1), pages 93-117, December.
    4. Maes, Dries & Vancauteren, Mark & Van Passel, Steven, 2016. "Investigating market power in the Belgian pork production chain," 149th Seminar, October 27-28, 2016, Rennes, France 245114, European Association of Agricultural Economists.

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    More about this item

    Keywords

    Agribusiness; Agricultural and Food Policy; Consumer/Household Economics; Industrial Organization; Marketing;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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