A framework is proposed for incorporating the degree of market competition in evaluating milk promotion effectiveness. The imperfect competition model allows simultaneity in price and quantity with an endogenous fluid milk premium. The model's usefulness is demonstrated with Japanese generic milk promotion data. Results show a conventional exogenous‐price or exogenous‐premium model will underestimate returns to milk promotion.
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Suzuki et al. (1994) studied this question.
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