Beggar-Thy-Self Advertising: A Multi-Market Model of Generic Promotion for Dairy Products

We develop a multi-market equilibrium displacement model that allows for demand linkages (substitutes or complements) across downstream product markets, and supply linkages through the common use of a raw commodity as the key input. Applying the model to the dairy sector, we find that the effectiveness of producer-funded advertising, and thus optimal advertising intensities, depends on the demand relationships across dairy product markets (cross-price and cross-advertising elasticities), as well as the re-allocation of raw milk towards the advertised market. We argue that the previous literature, which ignores the horizontal linkages highlighted here, tends to overstate the effectiveness of generic commodity promotion for dairy, and thus results in too much advertising.


Subject(s):
Issue Date:
2005
Publication Type:
Conference Paper/ Presentation
Record Identifier:
https://ageconsearch.umn.edu/record/19303
PURL Identifier:
http://purl.umn.edu/19303
Total Pages:
16
Series Statement:
Selected Paper 134358




 Record created 2017-04-01, last modified 2018-01-21

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)