Irreversibility in Advertising-Demand Response Functions: An Application to Milk

Philip R. Vande Kamp and Harry Kaiser

American Journal of Agricultural Economics, 1999, vol. 81, issue 2, 385-396

Abstract: A generalized methodology for estimating irreversible functions is developed. This approach, which accommodates short-term irreversibility and long-term reversibility, is an improvement over previous irreversibility studies that imposed both short- and long-term irreversibility. Using the proposed methodology, irreversibility in the demand response to fluid milk advertising in New York City is evaluated. Irreversibility is found to exist, and, in particular, consumers are found to react more rapidly to increases in advertising compared to decreases. This result may have important implications for optimal temporal advertising strategies. Copyright 1999, Oxford University Press.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:81:y:1999:i:2:p:385-396

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