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Abstract
The beggar-thy-neighbour aspect of commodity advertising means that benefits to one
commodity from advertising come at the expense of other commodities. The effect
can be mitigated by cooperation among groups as shown by Alston, Freebairn and James
(AFJ). A drawback to AFJ’s analysis is that some cooperative outcomes require side
payments from one producer group to another. This paper offers a bargaining solution as
an alternative to cooperation in the case where cooperative side payments would be
needed. We show that while bargaining without side payments is not as effective as
cooperation at reducing beggar-thy-neighbour effects, it is a welfare improving alternative
to non-cooperation and is likely more practical in many situations.