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Economic Evaluation Models of Generic Fluid Milk and Cheese Marketing Investment in Canada for the 2007-2011 Period

The Dairy Farmers of Canada (DFC), working on behalf of dairy producers, invest considerable sums of money in marketing activities for various dairy products. While previous studies (recently by Kaiser, Cranfield, and Doyon, 2006, 2007 and 2010) suggest that investment in generic fluid milk and cheese advertising and promotion does, indeed, generate a positive net return, sufficient time has lapsed to warrant a re-evaluation of these efforts. Moreover, the availability of a new source of data allows to a different type of modeling and the inclusion of more detailed household data.

This study estimates demand systems for Ontario and the Maritimes using data from A.C. Nielsen (i.e. Homescan) and data provided by DFC. It also estimates a demand systems for cheese in Canada (without Quebec) also using data from A.C. Nielsen (i.e. Homescan) and data provided by DFC. The Almost Ideal Demand System (AIDS), which allows estimated elasticities to vary over time, will be used in the econometric analysis. Based on these demand systems, simulation are used to undertake the calculation of return on investment.

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