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It is said that advertising of vegetables has little effect on the expansion of these demands so far. But recently, advertising is getting important for places of vegetable production, because many places of vegetable production intend to differentiate their products from the products of other places. This paper attempts to analyze the effect of advertising on vegetable demands. The vegetables are the onion and the potato which are advertised under "The Hokuren Program for Expanding Consumption of Onion and Potato." The advertising variable which summarizes the influence of current and past advertising expenditures on demand is used to estimate the impact of advertising on demand. The Pascal distributed lags are used to account for the influence of current and past advertising expenditures. Both parameter estimates of advertising variables in onion and potato equations are statistically significant. But the effect of advertising on the onion demand is different from that on the potato demand. The onion demand is quickly affected by the advertising, whereas the potato demand is slowly affected. Using the estimated equations, the effects of advertising on their demands are valued by the simulation analysis. If the price elasticities of supply of these vegetables are less than 1.0, the increase in supplier surplus is greater than the advertising cost of this program.

The Econometric Analysis of the Effect of Advertising on Vegetable Demands