Increased advertising expenditures raised fluid milk sales nearly 5 percent, or by about 7,455 million pounds, during September 1984-September 1991. Sales of natural and processed cheese consumed at home rose by about 25 million pounds and 290 million pounds in the same period because of increased generic advertising. An assessment of 15 cents per hundredweight of milk sold commercially, mandated by the Dairy and Tobacco Adjustment Act of 1983, funded the increase in advertising. The authors use econometric demand models to control for variables that influence the demand for milk and cheese. These variables include generic and branded advertising, market prices, income, and demographic characteristics.
