Dynamics of Advertising and Demand for Fluid Milk in the United States: An Incomplete Demand Approach

Fluid milk consumption has been on a decline in the United States for several years. The check off program funded by producers and processors of fluid milk provides generic advertising targeted at fluid milk consumption. Exploring how generic advertising affects fluid milk type consumption delineated by milk fat type is examined by incorporating a polynomial distributed lag advertising variable into an incomplete demand system. Seemingly unrelated regression results indicate that generic advertising indeed affects milk type consumption differently. The optimal advertising lag is five months. Whole milk has no significant advertising effects while low-fat and skim milks have positive, significant effects.