Approximating Farm‐Level Returns to Incremental Advertising Expenditure: Methods and an Application to the Australian Meat Industry

Abstract

Equilibrium displacement modeling is used to analyze the effects of incremental advertising expenditure by the Australian beef, lamb, and pork industries in domestic and export markets. The effects on prices, quantities traded, revenues, producer surpluses, and profits net of advertising expenditure are reported. Cross-commodity impacts of advertising are highlighted, including how one industry has to adjust its advertising expenditure to preserve profit levels in the face of increased advertising by another industry. The procedures used are useful when decisions about advertising expenditure need to be made quickly.