Bargaining rationale for cooperative generic advertising

John M. Crespi and Jennifer S. James

Australian Journal of Agricultural and Resource Economics, 2007, vol. 51, issue 4, pages 445-457

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. Copyright 2007 The Authors Journal compilation 2007 Australian Agricultural and Resource Economics Society Inc .

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