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HOW DOES ADVERTISING AFFECT MARKET PERFORMANCE? A NOTE ON GENERIC ADVERTISING

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We propose a novel approach to estimating the effect of advertising on market performance that relies on the preferences of firms participating in generic advertising programs. Generic advertising campaigns provide a unique window to observe advertising effects on market performance, because rotations in market demand systematically redistribute advertising rents among firms according to observable characteristics on producer size. We examine producer attitudes towards generic advertising in the “Beef. It's What's for Dinner!” campaign of the U.S. Beef Checkoff program, the subject of the recent and controversial Supreme Court ruling on generic advertising as a form of government speech. We find the likelihood producers favor an expansion of the advertising program increases in their operating scale. This finding is consistent with an advertising campaign that has led to a counterclockwise rotation of market demand and a commensurate increase in market performance in the U.S. beef market. (JEL L1, M37, Q13)
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Document Type: Research Article

Affiliations: 1: Professor and Chair, Department of Economics, Orfalea College of Business, California Polytechnic State University, San Luis Obispo, CA 93407. Phone 805-756-2555, Fax: 805-756-1473 2: Marvin and June Morrison Chair of Agribusiness and Resource Management, Morrison School of Agribusiness and Resource Management, Arizona State University, Mesa, AZ 58212. Phone 480-727-1488, Fax: 480-323-2294 3: Professor, Department of Agricultural & Applied Economics, University of Wisconsin, Madison, WI 53706. Phone 608-263-4176, Fax: 608-262-4376

Publication date: April 1, 2013

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