Optimal institutional mechanisms for funding generic advertising: An experimental analysis

verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. 1 Generic advertising programs have been a popular tool used by many agricultural commodity organizations in the United States to enhance market demand, raise prices, and increase producer net revenue. These programs operate by assessing producers in an industry and using the collected funds for generic (non-branded) advertising and promotion of the commodity. Currently, there are thirteen federal programs and over fifty state programs in existence. The majority of economic studies evaluating generic advertising programs have found large benefits for producers relative to costs. Funding for some commodity programs originally came from voluntary donations from participants via a voluntary contributions mechanism (VCM). While initial contributions for the advertising programs using a VCM were typically high, free-riding and decreased donations eventually became a significant problem, raising questions of equity and fairness. As a result of these concerns, essentially all VCMs were abandone