Mark G. Brown

A family of inverse demand systems and choice of functional form

Bartens (1992) analysis of choice of functional form for quantity-dependent demand systems is extended to price-dependent or inverse demand systems. Alternative inverse demand systems combining the features of the Rotterdam inverse demand and almost ideal inverse demand systems are examined. Choice of functional form is made through a synthetic model which under appropriate restrictions yields the different inverse demand systems. The synthetic model itself can also be considered a more flexible specification.

Incorporating generic and brand advertising effects in the Rotterdam demand system

This study incorporates generic and brand advertising into the Rotterdam demand system, based on utility theory. A two-stage budgeting process is specified in which the impact of advertising can be viewed as a price effect. The model is applied to data on orange juice demand.

Lag structures in commodity advertising research

This article examines basic assumptions about the lag structure of advertising. Evidence suggests for frequently consumed commodities, the lag structure is probably a monotonic decreasing function. Confusion may exist over what advertising variables to analyze and what shape the lag structure should take. Cumulative structures need to be differentiated from decay structures.

The impact of generic advertising and the free rider problem: A look at the US orange juice market and imports

Increased demand for an advertised product may increase price, that, in turn, may lead to a free rider problem where competitive imports increase and result in a smaller price increase than otherwise. A study of Florida Department of Citrus advertising for orange juice indicated that the free rider problem has notably limited the impact of advertising on price in the US market. High US orange juice demand, which in part has been a result of advertising, has attracted substantial amounts of orange juice imports. Imports have eroded the impact of advertising on price by an estimated two-thirds.

Equivalent Scales, Scale Economies, and Food Stamp Allotments: Estimates from the Nationwide Food Consumption Survey, 1977–78

Allotment and economy-of-scale adjustments are important in determining benefit levels for households participating in the Food Stamp Program. Economy-of-scale factors adjust levels of benefits based on the sizes of participating households. These economy-of-scale factors and the allotment are calculated currently using diet status, income, and household size. This paper shows that food stamp allotments for different household sizes can be determined independent of diet status using standard demand theory and the age-sex composition of the household. The results indicate that scale adjustments now used are related more to household composition than true economies.

Demand Systems for Competing Commodities: An Application of the Uniform Substitute Hypothesis

The uniform substitute hypothesis is used to develop a conditional demand system for juice products. The hypothesis offers a means to improve upon the precision of the parameter estimates and save degrees of freedom, when closely related competing goods are included in a demand system. Uniform substitute restrictions are tested for alternative juke groupings using the likelihood ratio test. The results indicate that juices in a group must be quite similar to accept the restrictions.

A measurement of the quality of orange-juice consumption

Theils index of quality of consumption was used to measure the quality of orange-juice products. A change in the quality of a group of goods is defined as the covariance between the goods income elasticities and logarithmic quantity changes. Over the sample from 1988 to mid 1999, the quality index for orange juice products was estimated to increase by about 50%. Decomposition of the change in quality showed that most of the increase resulted from strong demand trends. Income, prices, and advertising, each, had largely offsetting positive and negative impacts on quality over the sample.

Some observations on the impact of advertising on demand

This article examines the decay structure of advertising and the incorporation of advertising in systems of demand equations by scaling and translating methods. Under the assumption that a consumers purchase of an advertised product is directly related to his|her recall of a specific advertisement, the decay effect of advertising for everyday products is a monotonic decreasing function of time. In the scaling model, advertising has a tendency to be more effective when demand is price elastic (inelastic) given a quantity augmenting (diminishing) type scaling impact. In the translating model, the impact of advertising is related to the marginal propensity to consume.