OPTIMAL PRODUCER INVESTMENT IN GENERIC ADVERTISING - THE CASE OF FLUID MILK IN ONTARIO AND QUEBEC

The fluid milk sectors in Ontario and Quebec operate under myriad restrictions reflecting the supply management system in place. Active advertising campaigns for fluid milk are undertaken by producer organizations in each province. In Ontario, the provincial government contributes to the provincial advertising campaign. To investigate the implications of the advertising programs, econometric models of the Ontario and Quebec milk sectors are specified, estimated and simulated. Given the measured responses to advertising, optimal advertising expenditure rules are applied to the Ontario and Quebec milk sectors to evaluate the implications of moving from actual to optimal advertising expenditure for producer welfare.