This article examines the responsiveness of fluid milk sales to generic milk advertising in New York City, Albany, Syracuse, Rochester, and Buffalo markets. Fluid milk demand equations for New York City, Albany, Syracuse, Rochester, and Buffalo are estimated with monthly data for the period from January 1986 through June 1995. The results indicate that generic milk advertising is positive and statistically significant at the 10% significance level in each market. The highest advertising elasticity is in the Buffalo market, while the lowest is in Albany. The results also indicate that blend prices in the two New York milk marketing orders increased by 5.94 and 8.05 cents per cwt due to advertising, on average; while farmers invested 3.89 and 4.87 cents per cwt (in 1986 dollars) in fluid milk advertising for each market. A major policy implication is that New York dairy farmers should consider some reallocation of advertising expenditures among markets. © 1998 John Wiley & Sons, Inc.

A retail‐level hedonic model for analyzing the value of milk components contained in aggregate dairy product commodities is developed and applied to household food consumption survey data. The findings support Perrin's conjecture that a hedonic approach applied at the retail level can be used to value milk components. Milk component values are found to be a function of household sociodemographic variables. The sample‐weighted average implicit fat value estimate was very similar to values published in two of three previous component value analyses in the Journal, but protein values were significantly different.

Although raw milk is essentially a homogeneous input in the production of fluid milk and manufactured dairy products, in many countries the price received for fluid milk usage is higher than the price received for manufactured product usage. Such differences indicate that prices are not competitively determined. This certainly is the case in the United States, where federal and state milk marketing order programs establish minimum Class I price differentials (premiums) for most milk marketed. There are also over-order fluid premium payments resulting from negotiations between cooperatives and fluid processors.Changes in milk advertising expenditures should produce changes in milk prices as well as in milk demand. Thus, an advertising program's effectiveness should account for changes in both price and quantity; each should be treated as endogenous. Most studies of U.S. dairy markets either assume an exogenous fluid milk price (Thompson, Eiler, and Forker; Liu A framework is proposed for incorporating the degree of market competition in evaluating milk promotion effectiveness. The imperfect competition model allows simultaneity in price and quantity with an endogenous fluid milk premium. The model's usefulness is demonstrated with Japanese generic milk promotion data. Results show a conventional exogenous-price or exogenous-premium model will underestimate returns to milk promotion.

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