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The Problem of Free Riding in Voluntary Generic Advertising: Parallelism and Possible Solutions from the Lab
Author(s) -
Messer Kent D.,
Kaiser Harry M.,
Schulze William D.
Publication year - 2008
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2007.01114.x
Subject(s) - status quo , free riding , donation , mechanism (biology) , public good , turnover , business , point (geometry) , parallelism (grammar) , welfare , public economics , marketing , advertising , microeconomics , public relations , economics , computer science , political science , market economy , economic growth , philosophy , geometry , mathematics , management , epistemology , incentive , parallel computing
Producers of many commodities pay for generic advertising, which is a public good for producers and, in cases like healthy foods, enhances social welfare. Though most programs were initially funded through the Voluntary Contribution Mechanism, many became mandatory to mitigate free riding. This experimental research simulates key economic and psychological details of these programs and produces donation results strikingly similar to a historic example. Because mandatory programs may be declared unconstitutional, the Provision Point Mechanism is tested as an alternative. This research also shows that refund‐by‐request donation mechanisms establish a status quo of contributing and reduce free riding.