Optimal Institutional Mechanisms for Funding Generic Advertising: An Experimental Analysis
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Given the uncertain legal status of generic advertising programs for agricultural commodities,
alternative voluntary funding institutions are investigated hat could provide a high level of
benefits to producers. This experimental study simulates key economic and psychological
factors that affect producer contributions to generic advertising. The results suggests that
producer referendum play a critical role in increasing contributions and that producer surplus is
maximized by a Provision Point Mechanism instituted by producer referendum with thresholds
ranging from 68% to 90%, and expected funding from 47% to 77% of the time, depending on the
level of advertising effectiveness.