Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs |
| |
Authors: | Julian M Alston John W Freebairn & Jennifer S James |
| |
Institution: | Department of Agricultural and Resource Economics, University of California, Davis,;Department of Economics, University of Melbourne,;Department of Agricultural Economics and Rural Sociology, Pennsylvania State University |
| |
Abstract: | Profits from generic advertising by a producer group often come partly at the expense of producers of closely related commodities. The resulting tendency toward excessive advertising is exacerbated by check-off funding. To analyze this beggar-thy-neighbor behavior we compare a scenario where different producer groups cooperate and choose their advertising expenditures jointly to maximize the sum of profits across the groups, and a scenario where they optimize independently. In an illustrative example using 1998 data for U.S. beef and pork, the noncooperatively chosen expenditure on beef and pork advertising is more than three times the cooperative optimum. |
| |
Keywords: | cooperative and noncooperative solutions excessive advertising mandated commodity promotion programs U S beef and pork |
|
|