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EVALUATING PRIMARY PRODUCT PROMOTION: The Returns to Generic Advertising by a Producer Cooperative in a Small, Open Economy

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  • Alston, Julian M.
  • Carman, Hoy F.
  • Chalfant, James A.
Abstract
Studies have used a variety of criteria to evaluate the benefits from promotion and, relatedly, to prescribe optimal advertising strategy. Gross benefit measures, that do not account for the costs of the commodity, are clearly inappropriate. Allowing for international or interregional trade, or multiple outlets for a commodity (e.g., fresh and Processing) may mean that net benefits are small or zero. Some questions require Measures that account for other costs and benefits (such as consumer benefits and effects on taxpayers through commodity programs). This paper explores the effects of horizontally disaggregating commodity markets (into domestic and foreign and fresh and Processing), and allowing for market distortions from commodity programs, on producer incentives and on measures of the private and social payoff to advertising financed by a Per unit tax or check-off.

Suggested Citation

  • Alston, Julian M. & Carman, Hoy F. & Chalfant, James A., 1994. "EVALUATING PRIMARY PRODUCT PROMOTION: The Returns to Generic Advertising by a Producer Cooperative in a Small, Open Economy," Promotion in the Marketing Mix: What Works, Where and Why, April 28-29, 1994, Toronto, Canada 279601, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
    • Handle: RePEc:ags:rr6394:279601
    DOI: 10.22004/ag.econ.279601
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    1. John W. Freebairn, 1992. "Evaluating The Level And Distribution Of Benefits From Dairy Industry Research," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 36(2), pages 141-165, August.
    2. Alston, Julian M., 1991. "Research Benefits in a Multimarket Setting: A Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 59(01), pages 1-30, April.
    3. Michael K. Wohlgenant, 1993. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: The Case of the U.S. Beef and Pork Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 642-651.
    4. Green, Richard D. & Carman, Hoy F. & McManus, Kathleen, 1991. "Some Empirical Methods Of Estimating Advertising Effects In Demand Systems: An Application To Dried Fruits," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(1), pages 1-9, July.
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    Cited by:

    1. John M. Crespi & Stéphan Marette, 2003. "Are uniform assessments for generic advertising optimal if products are differentiated?," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 367-377.
    2. Julian M. Alston & James A. Chalfant & Jennifer S. James, 1999. "Doing well by doing a body good: An evaluation of the industry-funded nutrition education program conducted by the Dairy Council of California," Agribusiness, John Wiley & Sons, Ltd., vol. 15(3), pages 371-392.
    3. J. A. L. Cranfield, 2003. "Optimal Collective Investment in Generic Advertising, Export Market Promotion and Cost-of-Production-Reducing Research," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(3), pages 299-321, November.
    4. Hill, D. J. & Piggott, R. R. & Griffith, G. R., 2001. "Profitability of incremental generic promotion of Australian dairy products," Agricultural Economics, Blackwell, vol. 26(3), pages 253-266, December.
    5. Paul M. Patterson & Hans Olofsson & Timothy J. Richards & Sharon Sass, 1999. "An empirical analysis of state agricultural product promotions: A case study on Arizona Grown," Agribusiness, John Wiley & Sons, Ltd., vol. 15(2), pages 179-196.
    6. Julian M. Alston & John M. Crespi & Harry M. Kaiser & Richard J. Sexton, 2007. "An Evaluation of California's Mandated Commodity Promotion Programs," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(1), pages 40-63.
    7. Alston, Julian M. & Carman, Hoy F. & Chalfant, James A. & Crespi, John M. & Sexton, Richard J. & Venner, Raymond J., 1998. "The California Prune Board's Promotion Program: An Evaluation," Research Reports 11926, University of California, Davis, Giannini Foundation.
    8. Julian M. Alston & John W. Freebairn & Jennifer S. James, 2003. "Distributional issues in check-off funded programs," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 277-287.
    9. Kinnucan, Henry W. & Christian, Jason E., 1997. "A Method For Measuring Returns To Nonprice Export Promotion With Application To Almonds," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(1), pages 1-13, July.
    10. John M. Crespi, 2003. "The Generic Advertising Controversy: How Did We Get Here and Where Are We Going?," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(2), pages 294-315.
    11. Hill, D. J. & Piggott, R. R. & Griffith, G. R., 1996. "Returns from Incremental Promotion Expenditure in the Australian Dairy Industry," 1996 Conference (40th), February 11-16, 1996, Melbourne, Australia 156401, Australian Agricultural and Resource Economics Society.
    12. Freebairn, John W. & Alston, Julian M., 2001. "Generic advertising without supply control: implications of funding mechanisms for advertising intensities in competitive industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(1), pages 1-29.
    13. Reberte, J. Carlos & Schmit, Todd M. & Kaiser, Harry M., 1996. "An Ex Post Evaluation of Generic Egg Advertising in the U.S," Research Bulletins 122835, Cornell University, Department of Applied Economics and Management.
    14. Alston, Julian M. & Chalfant, James A. & Piggott, Nicholas E., 1995. "Demand Response And Returns To Incremental Advertising In The Australian Meat Industry," Economic Analysis of Meat Promotion, June 2-3, 1995, Denver, Colorado 279609, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
    15. Piggott, Roley R., 1995. "Returns To Incremental Advertising Expenditure in the Presence of Cross-Commodity Impacts and Inseparable Markets: An Equilibrium Displacement Modeling Approach," New Methodologies for Commodity Promotion Economics, October 5-6, 1995, Sacramento, California 279624, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.
    16. Holloway, Garth J. & Peyton, L. James & Griffith, Garry R., 2000. "Was the Australian Meat and Live-stock Corporation's advertising efficient?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(1), pages 1-27.
    17. Henry W. Kinnucan & Yuqing Zheng, 2004. "Advertising's effect on the market demand elasticity: A note," Agribusiness, John Wiley & Sons, Ltd., vol. 20(2), pages 181-188.
    18. Ding, Lily & Kinnucan, Henry W., 1996. "Market Allocation Rules For Nonprice Promotion With Farm Programs: U.S. Cotton," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(2), pages 1-17, December.
    19. Crespi, John M. & Marette, Stephan, 2001. "Are Assessments For Generic Advertising Optimal If Products Are Differentiated?," 2001 Annual meeting, August 5-8, Chicago, IL 20762, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Kinnucan, Henry W., 2003. "Optimal generic advertising in an imperfectly competitive food industry with variable proportions," Agricultural Economics, Blackwell, vol. 29(2), pages 143-158, October.
    21. Sterns, James A. & Ricks, Donald J., 2000. "Should Imports Free-Ride Or Help Pay-- Decisions About Generic Promotion Programs For Agricultural Commodities," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 3(2), pages 1-17.
    22. Cranfield, John A.L., 2002. "Optimal Advertising With Traded Raw And Final Goods: The Case Of Variable Proportions Technology," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(1), pages 1-18, July.
    23. Hill, Debbie J. & Piggott, Roley R. & Griffith, Garry R., 1999. "Profitability Of Incremental Generic Promotion Expenditure By Australian Dairy Farmers," Working Papers 12913, University of New England, School of Economics.
    24. Kinnucan, Henry W., 1997. "Middlemen behaviour and generic advertising rents in competitive interrelated industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(2), pages 1-17.
    25. Kinnucan, Henry W. & Ding, Lily & Xiao, Hui, 1996. "Nonprice Export Promotion with Market Distortions and Spillovers: The Case of IWS Wool Promotion in the United States," Agricultural Commodity Promotion Policies and Programs in the Global Agri-Food System, May 26-27, 1996, Cancun, Mexico 279650, Regional Research Projects > NECC-63: Research Committee on Commodity Promotion.

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