Advertising Traded Goods
Nerlove and Waugh's theory of cooperative (generic) advertising is extended to the case of traded goods. Results suggest that trade reduces the incentive to promote by enlarging the effective supply or demand elasticity facing the industry. This is especially true in the net exporter situation...
| Main Author: | |
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| Format: | Article |
| Language: | English |
| Published: |
Western Agricultural Economics Association
1999-07-01
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| Series: | Journal of Agricultural and Resource Economics |
| Subjects: | |
| Online Access: | https://ageconsearch.umn.edu/record/30872 |
| _version_ | 1819268241660313600 |
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| author | Henry W. Kinnucan |
| author_facet | Henry W. Kinnucan |
| author_sort | Henry W. Kinnucan |
| collection | DOAJ |
| description | Nerlove and Waugh's theory of cooperative (generic) advertising is extended to the case of traded goods. Results suggest that trade reduces the incentive to promote by enlarging the effective supply or demand elasticity facing the industry. This is especially true in the net exporter situation where the enlarged demand elasticity (relative to the autarky case) limits the ability to shift advertising costs onto consumers. Simulations of the model using data and parameter values for the California egg industry suggest that ignoring trade prejudices benefit-cost ratios in favor of the promotion program. The upward bias, moreover, is significant even when the trade share is modest. |
| first_indexed | 2024-12-23T21:29:56Z |
| format | Article |
| id | doaj.art-84277bae60474e0ab3f5344e0326d556 |
| institution | Directory Open Access Journal |
| issn | 1068-5502 2327-8285 |
| language | English |
| last_indexed | 2024-12-23T21:29:56Z |
| publishDate | 1999-07-01 |
| publisher | Western Agricultural Economics Association |
| record_format | Article |
| series | Journal of Agricultural and Resource Economics |
| spelling | doaj.art-84277bae60474e0ab3f5344e0326d5562022-12-21T17:30:29ZengWestern Agricultural Economics AssociationJournal of Agricultural and Resource Economics1068-55022327-82851999-07-01241385610.22004/ag.econ.3087230872Advertising Traded GoodsHenry W. KinnucanNerlove and Waugh's theory of cooperative (generic) advertising is extended to the case of traded goods. Results suggest that trade reduces the incentive to promote by enlarging the effective supply or demand elasticity facing the industry. This is especially true in the net exporter situation where the enlarged demand elasticity (relative to the autarky case) limits the ability to shift advertising costs onto consumers. Simulations of the model using data and parameter values for the California egg industry suggest that ignoring trade prejudices benefit-cost ratios in favor of the promotion program. The upward bias, moreover, is significant even when the trade share is modest.https://ageconsearch.umn.edu/record/30872benefit-cost analysisgeneric advertisingnerlove-waugh theorem |
| spellingShingle | Henry W. Kinnucan Advertising Traded Goods Journal of Agricultural and Resource Economics benefit-cost analysis generic advertising nerlove-waugh theorem |
| title | Advertising Traded Goods |
| title_full | Advertising Traded Goods |
| title_fullStr | Advertising Traded Goods |
| title_full_unstemmed | Advertising Traded Goods |
| title_short | Advertising Traded Goods |
| title_sort | advertising traded goods |
| topic | benefit-cost analysis generic advertising nerlove-waugh theorem |
| url | https://ageconsearch.umn.edu/record/30872 |
| work_keys_str_mv | AT henrywkinnucan advertisingtradedgoods |