Beggar-Thy-Self Advertising: A Multi-Market Model of Generic Promotion for Dairy Products

Joseph Balagtas () and Sounghun Kim

No 19303, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: We develop a multi-market equilibrium displacement model that allows for demand linkages (substitutes or complements) across downstream product markets, and supply linkages through the common use of a raw commodity as the key input. Applying the model to the dairy sector, we find that the effectiveness of producer-funded advertising, and thus optimal advertising intensities, depends on the demand relationships across dairy product markets (cross-price and cross-advertising elasticities), as well as the re-allocation of raw milk towards the advertised market. We argue that the previous literature, which ignores the horizontal linkages highlighted here, tends to overstate the effectiveness of generic commodity promotion for dairy, and thus results in too much advertising.

Keywords: Marketing (search for similar items in EconPapers)
Pages: 16
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19303

DOI: 10.22004/ag.econ.19303

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