Voluntary funding for generic advertising using a provision point mechanism: An Experimental Analysis of Option Assurance

Kent D Messer, Harry M Kaiser, Gregory Poe

    Research output: Contribution to journalArticle

    Abstract

    The mandatory nature of check-off programs remains a contentious policy issue. A provision point mechanism with a money-back guarantee offers an attractive, alternative voluntary funding approach, yet faces the problem of how to maintain future administrative capacity should contributions fall short of the funding threshold in the present period. To address this concern, a novel two-threshold, provision point mechanism is tested that sets a high threshold to fund marketing and a low threshold, if necessary, to secure administrative capacity for future advertising. Experimental results demonstrate that providing such "option assurance"sustains high overall contributions and, in some settings, can increase producer surplus.
    Original languageEnglish
    Pages (from-to)612-631
    JournalReview of Agricultural Economics
    Volume29
    Issue number3
    DOIs
    Publication statusPublished - 2007

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