Goodwill and Export Promotion Dynamics

Abstract

Federal subsidies for nonprice export promotion of farm products have been criticized on the grounds that they merely substitute taxpayer dollars for private promotional expenditures. This “displacement hypothesis” is tested by estimating export demand and advertising-goodwill re-lations using time series data for 1975-2008. The displacement hypothesis receives some support in that three of the nine tests show an inverse relationship between industry and government expenditures. However, the remaining tests show no relationship. These results, coupled with the finding of Kinnucan and Cai (2011) that expenditures for export promotion may be too high when consumer impacts are taken into account, suggest it is time to let the Market Access and Foreign Market Development programs operated by the U.S. Department of Agriculture lapse.

The apparent conflict of Norwegian pelagic fisheries management and Norwegian seafood council export promotion

“…The use of the simulation analysis is standard practice in the literature dealing with evaluation of the effectiveness of promotion programs. In Kinnucan and Gong (2014), the change in producer surplus, a measure of the welfare effect associated with promotion, is approximated as a function of: (1) the ownprice elasticity in the export market; (2) the export supply elasticity; (3) the export promotion elasticity; (4) the price elasticity of supply for domestic production; (5) the proportionate change in export price; (6) the proportionate change in export supply; and (7) the proportionate change in 'goodwill.' The term 'goodwill' used by Nerlove and Arrow (1962) is a stock variable associated with advertising.…”

“…In our analysis, we explicitly account for all these variables in as structural model in which the parameters are econometrically estimated rather than assumed except for the price elasticity of export supply which is close to zero given that the production is limited by quotas. Consequently, the simulation analysis is tantamount at least in theory to that of Kinnucan and Gong (2014) except that the model parameters are econometrically estimated not counting the export supply elasticities. Importantly, as stated previously, because no other exogenous variables in the model (e.g.…”

Advertising with Supply Control: Some Implications of Norwegian Whitefish Export Promotion

“…In Kinnucan and Gong (2014), the change in producer surplus, a measure of the welfare effect associated with promotion, is approximated as a function of: (1) the own-price elasticity in the export market; (2) the export supply elasticity; (3) the export promotion elasticity; (4) the price elasticity of supply for domestic production; (5) the proportionate change in export price; (6) the proportionate change in export supply; and (7) the proportionate change in a “goodwill” stock variable in which the amount of advertising in the current period is a function of the current level of goodwill which in turn is a function of current and past advertising outlays. In our analysis, we explicitly account for all these variables in a structural model in which the parameters are econometrically estimated rather than assumed, except for the price elasticity of export supply.…”

“…In our analysis, we explicitly account for all these variables in a structural model in which the parameters are econometrically estimated rather than assumed, except for the price elasticity of export supply. Consequently, our simulation analysis is tantamount, at least in theory, to that of Kinnucan and Gong (2014).…”

“…The concept of the export surplus as profit is particularly applicable to the Norwegian whitefish industry with restrictive fishery quotas because a higher price in this case primarily increases the profit of individual fishers. In Kinnucan and Gong (2014), the change in producer surplus, a measure of the welfare effect associated with promotion, is approximated as a function of:…”