Middlemen behaviour and generic advertising rents in competitive interrelated industries

Henry Kinnucan

Australian Journal of Agricultural and Resource Economics, 1997, vol. 41, issue 2, 17

Abstract: This article focuses on the role of middlemen in determining the returns to generic advertising in a competitive industry where supply is uncontrolled, the price of marketing inputs is endogenous, and retail markets are interrelated through consumer preferences. Theoretical analysis suggests farm-gate returns (quasi-rents) are overstated when input substitution at middlemen level is ignored, a result confrmed in the empirical application. As for mark-up behaviour, represented by the farm-retail price transmission elasticity, a general result is that farm-gate returns to generic advertising always increase as the transmission elasticity decreases, provided retail demand is more elastic than input substitution. Endogenising the price of marketing inputs has little effect on advertising rents.

Keywords: Agribusiness; Marketing (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aareaj:118014

DOI: 10.22004/ag.econ.118014

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