The Procompetitive Effect of Demand-Enhancing Check-Off Programs

John Crespi and Stéphan Marette ()

American Journal of Agricultural Economics, 2007, vol. 91, issue 2, 389-401

Abstract: This article explores demand-enhancing check-off programs and how such programs may influence both private programs as well as industry market structure. Under duopoly, a firm may increase its sales through privately funding product quality improvements. However, such endogenous sunk costs may also be used to exclude a rival. Industry-funded check-off programs affect firms’ strategies and can be procompetitive. The rationale lies not only in how the check-off enhancement is perceived by consumers but also in the way the check-off’s crowding-out effect reduces the ability of a firm to use its private expenditures to bar a rival’s market access. Copyright 2007, Oxford University Press.

Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:91:y:2007:i:2:p:389-401

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