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Estimating Asymmetric Advertising Response: An Application to U.S. Nonalcoholic Beverage Demand

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  • Zheng, Yuqing
  • Kaiser, Harry M.

Abstract

We propose a regime-switching model that allows demand to respond asymmetrically to upward and downward advertising changes. With the introduction of a smooth transition function, the model features smooth rather than abrupt parameter changes between regimes. We apply the model to nonalcoholic beverage data in the United States for 1974 through 2005 to investigate asymmetric advertising response. Results indicate that a decrease in milk advertising had a more profound impact on milk demand than an increase did. An increase in milk advertising had no impact on milk demand, but a decrease could have an own-advertising elasticity up to 0.049.

Suggested Citation

  • Zheng, Yuqing & Kaiser, Harry M., 2008. "Estimating Asymmetric Advertising Response: An Application to U.S. Nonalcoholic Beverage Demand," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(3), pages 837-849, December.
    • Handle: RePEc:cup:jagaec:v:40:y:2008:i:03:p:837-849_00
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    References listed on IDEAS

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    1. Jochen Meyer & Stephan von Cramon‐Taubadel, 2004. "Asymmetric Price Transmission: A Survey," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(3), pages 581-611, November.
    2. Alston, Julian M. & Chalfant, James A. & Piggott, Nicholas E., 2001. "Incorporating demand shifters in the Almost Ideal demand system," Economics Letters, Elsevier, vol. 70(1), pages 73-78, January.
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    Cited by:

    1. Dustin L Pendell & Thomas L Marsh & Keith H Coble & Jayson L Lusk & Sara C Szmania, 2015. "Economic Assessment of FMDv Releases from the National Bio and Agro Defense Facility," PLOS ONE, Public Library of Science, vol. 10(6), pages 1-22, June.
    2. Xiaoou, Liu, 2009. "Rational Addiction Evidence From Carbonated Soft Drinks," 2009 Conference, August 16-22, 2009, Beijing, China 51620, International Association of Agricultural Economists.
    3. Hyeyoung Kim & Lisa House & Matthew Salois, 2015. "Consumer response to media information: the case of grapefruit-medicine interaction," Health Economics Review, Springer, vol. 5(1), pages 1-12, December.
    4. Xin Xu & Jayachandran N Variyam & Zhenxiang Zhao & Frank J Chaloupka, 2014. "Relative Food Prices and Obesity in U.S. Metropolitan Areas: 1976-2001," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-22, December.
    5. Gabe, Todd, 2008. "Fiscal and Economic Impacts of Beverage Excise Taxes Imposed by Maine Public Law 629," MPRA Paper 66888, University Library of Munich, Germany.
    6. Lambert, Remy, 2012. "A Primer on the Economics of Supply Management and Food Supply Chains," Working Papers 125246, Structure and Performance of Agriculture and Agri-products Industry (SPAA).

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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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