Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion ProgramsAmerican Journal of Agriculture Economics
AbstractProfits 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.
Copyright2001 Oxford University Press. This is a pre-copy-editing, author-produced PDF of an article accepted for publication in American Journal of Agriculture Economics following peer review.
Citation InformationJennifer S. James, Julian M. Alston and John W. Freebairn. "Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs" American Journal of Agriculture Economics Vol. 83 Iss. 4 (2001) p. 888 - 902
Available at: http://works.bepress.com/jsjames/6/