Does Government Sponsored Advertising Increase Social Welfare? A Theoretical and Empirical Investigation

Carlos Carpio and Olga Isengildina-Massa
Authors registered in the RePEc Author Service: Olga Isengildina Massa

No 149835, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: The main objective of this study was to analyze the effect of advertising on social welfare in a perfectly competitive market where the level of advertising is chosen by a social planner. The theoretical model revealed that social planner sponsored advertising that increases the equilibrium price of the advertised good can increase society’s welfare if the effect of advertising in consumers’ utility is higher than the consumer welfare reducing price effect (producer welfare is increased by the same amount as the reduction in consumer welfare). The empirical illustration focuses on the U.S. state of South Carolina “buy local” food products campaign. The findings suggest that this government sponsored advertising campaign increases total welfare.

Keywords: Agricultural and Food Policy; Consumer/Household Economics; Demand and Price Analysis; Marketing (search for similar items in EconPapers)
Pages: 36
Date: 2013-05-30
New Economics Papers: this item is included in nep-agr and nep-mkt
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Does Government-sponsored Advertising Increase Social Welfare? A Theoretical and Empirical Investigation (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:149835

DOI: 10.22004/ag.econ.149835

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