Generic Dairy Advertising Effects In A Multi-Market Equilibrium

Advertising is the most important approach to encouraging the individual to consume new goods and services or increase old goods and services consumption. Milk and dairy product as the basic product is one of important healthy product that has been always the main concern of governments, especially Iran's government. In this study, generic dairy (processed milk and cheese) advertising effects on fluid milk price and supply and then producer surplus in farm level was assessed. Then, optimal milk generic advertising expenditure for increasing social milk consumption and maximizing fluid milk producer surplus for yeas of 2009-2014 with Multi-Market Equilibrium model was assessed. Results indicated that generic processed milk advertising impacts on fluid milk supply in farm level are positive and its elasticity fluctuates from 0.00876 to 0.09244. Also, optimal processed milk advertising share from supplied processed milk was 3.78-20.85 percent. That is, processed milk producers should spend 4-21 percent of their sales to generic advertising to maximization producer surplus farm level.