Abstract
Graphical analysis is used to demonstrate the effects of an advertising excise tax on price, output, and welfare. Results indicate the costs of advertising check-off programs in general are not borne entirely by producers but rather are passed on in part to consumers in the form of higher retail prices. Consequently, (a) estimates of producers' returns to advertising that ignore the incidence of the advertising tax will be understated, (b) the ability to shift the advertising tax gives producers an added incentive to support check-off programs, and (c) because advertising check-off programs affect consumer as well as producer surplus (i.e., have social welfare implications) government oversight is warranted.
Published Version
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