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Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: Further Results

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  • Chung, Chanjin
  • Kaiser, Harry M.

Abstract

In this study, we examine the distributional effects of research versus consumer promotion. A few years ago, a notable article by Wohlgenant (AlAE 75, 1993) investigated this issue and concluded that producers would benefit more from research on farm-level production than from research on marketing services and promotion. His findings have drawn important policy implications for the allocation of checkoff funds, especially for those producer groups (e.g., dairy, beef, and pork) who spend a large share of their funds on consumer promotion. We challenge his conclusions. We contend that his findings are confined to a special case, the parallel shift in demand and supply. To verify our claim, we reexamined his findings with an alternative case, a pivotal shift, and found that consumer promotions benefitted producers more than research activities. Our new findings indicate that the relative profitability of research versus promotion is highly sensitive to the assumption of the nature of shifts in demand and supply.

Suggested Citation

  • Chung, Chanjin & Kaiser, Harry M., 1998. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: Further Results," Research Bulletins 122701, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudarb:122701
    DOI: 10.22004/ag.econ.122701
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    References listed on IDEAS

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    1. J. M. Alston & G. M. Scobie, 1983. "Distribution of Research Gains in Multistage Production Systems: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 353-356.
    2. John D. Mullen & Michael K. Wohlgenant & Donald E. Farris, 1988. "Input Substitution and the Distribution of Surplus Gains from Lower U.S. Beef-Processing Costs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(2), pages 245-254.
    3. Julian M. Alston & James A. Chalfant, 1993. "The Silence of the Lambdas: A Test of the Almost Ideal and Rotterdam Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 304-313.
    4. Michael K. Wohlgenant, 1993. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: The Case of the U.S. Beef and Pork Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 642-651.
    5. Jan P. Voon & Geoff W. Edwards, 1991. "The Calculation of Research Benefits with Linear and Nonlinear Specifications of Demand and Supply Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 415-420.
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