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Optimal Advertising With Traded Raw And Final Goods: The Case Of Variable Proportions Technology

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  • Cranfield, John A.L.

Abstract

An optimal advertising investment rule is derived for a vertically related, competitive market with traded final and raw goods and processing sector characterized by variable proportions technology and nonconstant returns to scale. An equilibrium displacement framework incorporating conditional factor demands is used to account for the elasticity of substitution between agricultural and nonagricultural inputs to the marketing channel. Simulation for the Canadian beef industry in the post-WTO environment demonstrates how optimal advertising intensity ranges between 0.05% and 0.22% of farm-level market revenue.

Suggested Citation

  • Cranfield, John A.L., 2002. "Optimal Advertising With Traded Raw And Final Goods: The Case Of Variable Proportions Technology," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(1), pages 1-18, July.
    • Handle: RePEc:ags:jlaare:31084
    DOI: 10.22004/ag.econ.31084
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    References listed on IDEAS

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    2. Lusk, Jayson L. & Anderson, John D., 2004. "Effects of Country-of-Origin Labeling on Meat Producers and Consumers," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(2), pages 1-21, August.

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