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          Volume 28, Number 03, December 2003 >

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Title: Incentives to Advertise and Product Differentiation
Authors: Hunnicutt, Lynn
Israelsen, L. Dwight
Keywords: advertising
check-off programs
commodity promotion
Issue Date: 2003-12
Abstract: Recent court rulings question the ability of commodity groups to fund generic promotions through mandatory check-off programs. A model examining incentives to fund brand advertisements when both brand and generic advertising exist is presented. Brand advertising expands the market by attracting new consumers to the industry, and allows the advertising firm to take customers from rivals in the industry. Homogeneous products are advertised too little relative to the amount that maximizes total industry profits, and brandable products are advertised too much. The optimal check-off rate is derived, and the Dorfman-Steiner condition is shown to be a special case of this model.
Institution/Association: Journal of Agricultural and Resource Economics>Volume 28, Number 03, December 2003
Total Pages: 14
Language: English
From Page: 451
To Page: 464
Collections:Volume 28, Number 03, December 2003

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