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Price and Quality Effects of Generic Advertising: The Case of Norwegian Salmon

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  • Myrland, Oystein
  • Dong, Diansheng
  • Kaiser, Harry M.

Abstract

In this paper, a two-equation sample selection model is used to estimate a household demand function for salmon incorporating domestic generic advertising. The twoequation estimation procedure, based on purchase and unit value equations, allows us to handle heavily censored panel data for salmon purchases by Norwegian households and the quality effects simultaneously. Unit values of the aggregated salmon commodity calculated from the observed expenditures and quantities are hypothesized to represent the average quality of the purchased commodity. Advertising effects on both purchases and unit values are investigated. The model also allows us to separate the effects of conditional purchases and purchase probabilities. Results indicate that most (78%) of the advertising effect is through the change of non-purchase occasions to purchase occasions, and that generic salmon advertising induces Norwegian households to spend more money on salmon. However, advertising causes households to select more expensive products rather than increasing their purchased quantities.

Suggested Citation

  • Myrland, Oystein & Dong, Diansheng & Kaiser, Harry M., 2003. "Price and Quality Effects of Generic Advertising: The Case of Norwegian Salmon," Research Bulletins 122112, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudarb:122112
    DOI: 10.22004/ag.econ.122112
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    References listed on IDEAS

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    1. Knoblauch, Wayne A. & Putnam, Linda D. & Karszes, Jason, 2001. "Dairy Farm Management: Business Summary, New York State, 2000," Research Bulletins 122646, Cornell University, Department of Applied Economics and Management.
    2. Timothy J. Richards, 2000. "A discrete|continuous model of fruit promotion, advertising, and response segmentation," Agribusiness, John Wiley & Sons, Ltd., vol. 16(2), pages 179-196.
    3. Schmit, Todd M. & Chung, Chanjin & Dong, Diansheng & Kaiser, Harry M. & Gould, Brian W., 2000. "The Effect Of Generic Dairy Advertising On The Household Demand For Milk And Cheese," 2000 Annual meeting, July 30-August 2, Tampa, FL 21775, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Schlough, Charles A. & Streeter, Deborah H., 2002. "Needs of Agriculture Educators for Training, Resources, and Professional Development in Business Management and Marketing," Research Bulletins 122639, Cornell University, Department of Applied Economics and Management.
    5. Knoblauch, Wayne A. & Putnam, Linda D. & Karszes, Jason, 2002. "Dairy Farm Management Business Summary: New York State, 2001," Research Bulletins 122640, Cornell University, Department of Applied Economics and Management.
    6. Henry W. Kinnucan & Øystein Myrland, 2002. "The Relative Impact of the Norway‐EU Salmon Agreement: a Mid‐term Assessment," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 195-219, July.
    7. Kinnucan, Henry W & Myrland, Oystein, 2000. "Optimal Advertising Levies with Application to the Norway-EU Salmon Agreement," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(1), pages 39-57, March.
    8. Schmit, Todd M. & Dong, Diansheng & Chung, Chanjin & Kaiser, Harry M. & Gould, Brian W., 2002. "Identifying The Effects Of Generic Advertising On The Household Demand For Fluid Milk And Cheese: A Two-Step Panel Data Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(1), pages 1-22, July.
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    Cited by:

    1. Gould, Brian W. & Dong, Diansheng, 2004. "Product Quality And The Demand For Food: The Case Of Urban China," 2004 Annual meeting, August 1-4, Denver, CO 20010, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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