Milk Optimal Generic Advertising Expenditure in an Imperfect Competitive Marketing Level

Document Type : Original Article

Authors

1 Assistant Professor of Agricultural Economics, Department of Agricultural Economics, Sayyed Jamaleddin Asadabadi University (SJAU), Hamedan, Iran

2 PHD in Agricultural Economics and General Director of Commerce Standards Bureau, Trade and Agricultural Industries Deputy, Ministry of Jihade Agriculture, Tehran, Iran

Abstract

Commodity demand development such as milk and its processed are important nutrition strategies of government such as I.R. Iran government. For this, some of government health budgets and producer expenditures are allocated to milk consumption promotion by generic advertising. Accordingly, advertising expenditures are important component of production cost. Determination of optimal advertising budget in firms is basic question in accounting cost list. Accordingly, target of this study is determination of optimal generic advertising budget by using of multi stage marketing model and existence of market power in different stages. That is, the main target of this paper is determination of milk optimal generic advertising budget in farm level and processed milk in retail level under different scenarios of market power. Results indicate that, in average, the most optimal advertising intensity in farm level (share of advertising in fluid milk supply 3.38142 percent) is related to condition that farm and retail market are competitive and monopoly, respectively. The least optimal advertising intensity (0.00209 percent) is related to condition that farm and retail market are monopoly and competitive, respectively. Also, existence of market power condition in farm and retail levels on generic adverting intensity is negative. But increasing in market power in farm and retail levels has opposite effect on generic adverting intensity. That is, by increasing farm market power, optimal advertising intensity in retail level; will increase and by increasing retail market power, optimal advertising intensity in retail level; will decrease. 

Keywords

References

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Agricultural Economics and Development
Volume 26, Issue 2 - Serial Number 102
October 2018
Pages 217-244

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