Identifying the Extensive and Intensive Effects of Generic Advertising on the Household Demand for Fluid Milk and Cheese
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A two-step sample selection model is used to estimate household demand equations for fluid milk
and cheese products incorporating national generic advertising. This approach allows us to
disentangle the incidence of the advertising effect on the probability of purchase and changes in the
level of consumption. Generic advertising for fluid milk had a predominantly intensive effect on athome
fluid milk demand, implying that advertising was relatively more effective at increasing the
consumption of current consumers. Conversely, the at-home cheese demand response to generic
cheese advertising was almost exclusively extensive, with virtually the entire increase in quantity
demanded due to an increase in the household’s probability of purchase.