Belleza “Price and Quantity Effects of Canada’s Dairy Advertising Programs

An equilibrium-displacement model is combined with econometric estimates of key model parameters to identify the impacts of Canada's dairy advertising programs on prices and quantity. Results suggest increased advertising of fluid milk enhances the farm value of milk but has minimal effect on government costs of the dairy price-support program. Owing to government intervention in the butter market, increased butter advertising has no effect on the farm value of milk, at least in the short run, but is highly effective at reducing government costs. Advertising is most effective, ceteris paribus, in markets where retail demand and wholesale supply for the specific dairy product are relatively price inelastic. Despite large increases in the amount of money mates of supply, demand, price transmission and spent on generic (non-brand) advertising of food advertising elasticities that may be useful for the products by agricultural groups over the past de- analysis of government policies and other forces cade (e.g., see Forker and Ward), relatively little affecting the Canadian dairy industry. is known about the economic impacts of the pro- The research objectives are accomplished by grams. The few studies that have been done focus specifying an equilibrium-displacement model that on U.S. programs (Liu et al.; Kaiser et al.; Zidack, takes into account the important policy interven