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Bargaining rationale for cooperative generic advertising*
Author(s) -
Crespi John M.,
James Jennifer S.
Publication year - 2007
Publication title -
australian journal of agricultural and resource economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.683
H-Index - 49
eISSN - 1467-8489
pISSN - 1364-985X
DOI - 10.1111/j.1467-8489.2007.00385.x
Subject(s) - payment , commodity , microeconomics , welfare , economics , advertising , business , market economy , finance
The beggar‐thy‐neighbour aspect of commodity advertising means that benefits to one commodity from advertising come at the expense of other commodities. The effect can be mitigated by cooperation among groups as shown by Alston, Freebairn and James (AFJ). A drawback to AFJ's analysis is that some cooperative outcomes require side payments from one producer group to another. This paper offers a bargaining solution as an alternative to cooperation in the case where cooperative side payments would be needed. We show that while bargaining without side payments is not as effective as cooperation at reducing beggar‐thy‐neighbour effects, it is a welfare improving alternative to non‐cooperation and is likely more practical in many situations.