Do Farmers Get an Equal Bang for Their Buck from Generic Advertising Programs? A Theoretical and Empirical Analysis

• Main Authors: Chanjin Chung, Harry M. Kaiser
• Format: Article
• Language: English
• Published: Western Agricultural Economics Association 2000-07-01
• Series: Journal of Agricultural and Resource Economics
• Subjects: distribution; farm size; generic advertising benefit; supply elasticity
• Online Access: https://ageconsearch.umn.edu/record/30841

This study presents a theoretical and empirical analysis of the distribution of generic advertising benefits across individual producers. We develop a closed-economy partial equilibrium model that allows for the presence of producer heterogeneity in supply response. Analytical results indicate that producers having less elastic supply response capture more benefits per dollar expended than producers with more elastic supply response. The extent of unequal distribution depends on parameters characterizing industries. The inequality may not be a significant problem for some industries, especially where the firm-level supply elasticities are not substantially different among producers, but it may be an important issue when industries have substantial differences in firm-level supply elasticities and firm sizes, and experience large demand shifts due to advertising programs