Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: Further Results

Chanjin Chung () and Harry Kaiser

No 122701, Research Bulletins from Cornell University, Department of Applied Economics and Management

Abstract: In this study, we examine the distributional effects of research versus consumer promotion. A few years ago, a notable article by Wohlgenant (AlAE 75, 1993) investigated this issue and concluded that producers would benefit more from research on farm-level production than from research on marketing services and promotion. His findings have drawn important policy implications for the allocation of checkoff funds, especially for those producer groups (e.g., dairy, beef, and pork) who spend a large share of their funds on consumer promotion. We challenge his conclusions. We contend that his findings are confined to a special case, the parallel shift in demand and supply. To verify our claim, we reexamined his findings with an alternative case, a pivotal shift, and found that consumer promotions benefitted producers more than research activities. Our new findings indicate that the relative profitability of research versus promotion is highly sensitive to the assumption of the nature of shifts in demand and supply.

Keywords: Marketing; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 11
Date: 1998-11
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cudarb:122701

DOI: 10.22004/ag.econ.122701

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