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Publication Date:
March 2007
ISSN:
1542-0485
DOI:
10.2202/1542-0485.1153

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Generic Advertising and Product Differentiation Revisited

John M. Crespi

1Kansas State University

Citation Information: Journal of Agricultural & Food Industrial Organization. Volume 5, Issue 1, Pages –, ISSN (Online) 1542-0485, DOI: 10.2202/1542-0485.1153, March 2007

Publication History:
Published Online:
2007-03-28

This paper revisits the analysis of generic commodity advertising under product differentiation by Crespi and Marette. Crespi and Marette had shown that a dominant firm producing high-quality goods and facing a competitive fringe of lower quality producers could be harmed by a generic advertising campaign while the fringe was left unaffected. Under this dominant-firm model, a question remained why these producers might support a program for which they were indifferent. In this paper we show that under a duopoly model a high-quality firm may be harmed while its lower-quality rival may be made better off by a generic program, thus helping to explain why some producers might favor a program while others do not. Further, this paper dismisses the claim made by some litigants that increased branded advertising is the result of a deleterious effect of generic advertising.

Keywords: generic advertising; commodity promotion; product differentiation; checkoffs

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