Optimal institutional mechanisms for funding generic advertising: an experimental analysis

Given the uncertain legal status of generic advertising programs for agricultural commodities, alternative voluntary funding institutions are investigated that could provide a high level of benefits to producers. This experimental study simulates key economic and psychological factors that affect vo...

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Bibliographic Details
Published in:American journal of agricultural economics 2005-11, Vol.87 (4), p.1046-1060
Main Authors: Messer, Kent D., Schmit, Todd M., Kaiser, Harry M.
Format: Article
Language:English
Subjects:
Advertising
Advertising rates
Advertising research
Agricultural commodities
Agricultural economics
Agricultural production
agricultural products
check-off programs
Commodities
Commodity market
Cost benefit ratio
donations
economic impact
Economic models
Economic theory
Empirical tests
Experimental economics
Experiments
First Amendment-US
Funding
generic advertising
generic commodity advertising
Institutional advertising
Laboratories
M310
M370
market regulations
Marketing
producer referendum
Producer surplus
provision point mechanism
psychosocial factors
Public good
Q130
Referendums
simulation models
Sponsored search
Statistical analysis
Studies
Threshing
trade associations
U.S.A
voluntary funding institutions
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Summary:Given the uncertain legal status of generic advertising programs for agricultural commodities, alternative voluntary funding institutions are investigated that could provide a high level of benefits to producers. This experimental study simulates key economic and psychological factors that affect voluntary producer contributions to generic advertising. The results suggest that producer referenda play a critical role in increasing contributions and that producer surplus is maximized by a provision point mechanism instituted by producer referendum with thresholds ranging from 68% to 90%, and expected funding from 47% to 77% of the time, depending on the level of advertising effectiveness.
ISSN:0002-9092
1467-8276
DOI:10.1111/j.1467-8276.2005.00787.x