Übermäßige Werbung und Marktsegmentierung durch staatliche Förderung der Regionalvermarktung: Eine theoretische Analyse

The protection of the regional origin of foods is a major part of the food-quality policy in the EU. It is the objective of this article to analyze economic effects of such policy instruments. Two different types of policy are distinguished which are both designed to promote regional products. First, generic promotion of a homogeneous commodity at the national and/or regional level in the spirit of NERLOVE and WAUGH is investigated. This instrument aims at shifting the demand for the advertised commodity outward. We derive theoretically that excessive advertising does exist if several promotion activities at different regional levels exist at one time. It would be more cost-effective due to product substitutability to move from separate strategies at the level of states to a coordinated uniform generic promotion. Secondly, there is support in the EU for regional-origin labels which combine quality assurance with the regional label. Product heterogeneity arises here when regional products reach above-average quality and prices increase. A segmented market model is utilized to show that the price bonus is affected by the magnitude of promotion expenditures, by own – and cross-price advertising elasticities on the markets and by marginal costs of program participation.

Other Titles:
Excessive advertising, market segmentation and regional-origin labelling: a theoretical analysis
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Journal Article
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ISSN 0002-1121 (Other)
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German Journal of Agricultural Economics, 54, 03
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 Record created 2017-04-01, last modified 2020-10-28

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