Optimal institutional Mechanisms for Funding Generic Advertising: An Experimental Analysis
Messer, Kent D.; Schmit, Todd M.; Kaiser, Harry M.
Given the uncertain legal status of generic advertising programs for agricultural commodities, alternative voluntary funding institutions are investigated hat could provide a high level of benefits to producers. This experimental study simulates key economic and psychological factors that affect producer contributions to generic advertising. The results suggests that producer referendum play a critical role in increasing contributions and that producer surplus is maximized by a Provision Point Mechanism instituted by producer referendum with thresholds ranging from 68% to 90%, and expected funding from 47% to 77% of the time, depending on the level of advertising effectiveness.
NICPRE 04-05; R.B. 2004-12
Charles H. Dyson School of Applied Economics and Management, Cornell University