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Measuring the Benefits to Advertising under Monopolistic Competition

Author

Listed:
  • Boland, Michael A.
  • Crespi, John M.
  • Silva, Jena
  • Xia, Tian

Abstract

This paper determines the benefits and costs of firm-level advertising in a monopolistically competitive industry. The model is useful in an environment in which firm-level costs may be absent or imprecise. The empirical example uses data on the advertising for a new line of prune snacks by Sunsweet Growers between 2008 and 2010, revealing average benefit-cost estimates from $1.26 to $4.35 for every dollar allocated to the new product line.

Suggested Citation

  • Boland, Michael A. & Crespi, John M. & Silva, Jena & Xia, Tian, 2012. "Measuring the Benefits to Advertising under Monopolistic Competition," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(1), pages 1-12, April.
    • Handle: RePEc:ags:jlaare:122308
    DOI: 10.22004/ag.econ.122308
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    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. John Crespi & Stéphan Marette, 2002. "Generic Advertising and Product Differentiation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 691-701.
    4. AfDB AfDB, . "AfDB Group Annual Report in Brief 2009," Annual Report, African Development Bank, number 65 edited by Koua Louis Kouakou.
    5. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    6. AfDB AfDB, . "AfDB Group Annual Report 2009," Annual Report, African Development Bank, number 66 edited by Koua Louis Kouakou.
    7. Jun Ruan & Munisamy Gopinath & Steven Buccola, 2008. "Welfare Effects of Technological Convergence in Processed Food Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 447-462.
    8. AfDB AfDB, . "AfDB Group Annual Report 2009 (Arabic)," Annual Report, African Development Bank, number 68 edited by Koua Louis Kouakou.
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    Cited by:

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    2. Sporleder, Thomas L. & Boland, Michael A., 2011. "Exclusivity of Agrifood Supply Chains: Seven Fundamental Economic Characteristics," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 14(5), pages 1-15, December.

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