Rural Product Promotion: Economic Aspects Of Promotability, Organization And Public Assistance

The economic theory of product promotion has been developed within the framework of the theory of imperfect competition and under rather restrictive conditions. Application of these theories to rural product promotion is, in most cases, of limited value. This paper first examines some characteristics of agricultural product markets which necessitate modification of standard promotion theory. Some further complex issues in promotion theory as it relates to agricultural products are then examined. These include the stabilization of funds fOl financing promotion expenditures, promotion strategy under price discrimination schemes characteristic of several Australian primary product markets, the welfare consequences of promotion by primary producer promotion cartels, possible terms of trade effects of overseas promotion expenditures, and subsidies for rural product promotion as a form of tariff compensating income transfers. The paper concludes with a discussion of the cases for public intervention in rural product promotion.