Premium
The Procompetitive Effect of Demand‐Enhancing Check‐Off Programs
Author(s) -
Crespi John M.,
Marette Stéphan
Publication year - 2009
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.1467-8276.2009.01254.x
Subject(s) - sunk costs , duopoly , quality (philosophy) , product (mathematics) , crowding out , industrial organization , microeconomics , business , economics , product market , crowding , marketing , monetary economics , incentive , epistemology , neuroscience , cournot competition , biology , philosophy , geometry , mathematics
This article explores demand‐enhancing check‐off programs and how such programs may influence both private programs as well as industry market structure. Under duopoly, a firm may increase its sales through privately funding product quality improvements. However, such endogenous sunk costs may also be used to exclude a rival. Industry‐funded check‐off programs affect firms’ strategies and can be procompetitive. The rationale lies not only in how the check‐off enhancement is perceived by consumers but also in the way the check‐off's crowding‐out effect reduces the ability of a firm to use its private expenditures to bar a rival's market access.