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The Allocation of Advertising and Research Dollars in the Florida Orange Juice Industry

Author

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  • Brown, Mark G.
  • Spreen, Thomas H.

Abstract

This study considers the allocation of Florida citrus‐grower money between advertising and research programs to maximize grower revenue net of program costs. The allocation depends on the impact of advertising on demand and the impacts of research on the cost of production and supply. A number of studies have estimated the impact of advertising on OJ demand, but little is known about the impact of research. Research on citrus greening, a disease that has no known cure, is examined in the present study. There are no past studies to reliably gauge the impact of this research. The approach taken here is to ask if a given amount of research dollars is needed to reduce average production costs by certain amount, then what should be spent on advertising based on past estimates of the elasticity of demand with respect to advertising. The optimal ratio of advertising to research dollars increases with the advertising elasticity and declines with the amount of research money needed to reduce average costs. The results of this study provide a range for this ratio based on different advertising elasticities and amounts of research dollars needed to reduce production costs. The approach provides an indication of the importance of advertising given expectations on the research needed to successfully fight this disease

Suggested Citation

  • Brown, Mark G. & Spreen, Thomas H., 2010. "The Allocation of Advertising and Research Dollars in the Florida Orange Juice Industry," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 1(1), pages 1-9.
  • Handle: RePEc:ags:ijofsd:91140
    DOI: 10.22004/ag.econ.91140
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    Cited by:

    1. Baldwin, Katherine L. & Jones, Keithly G., 2012. "U.S. Citrus Import Demand: Seasonality and Substitution," 2012 Annual Meeting, February 4-7, 2012, Birmingham, Alabama 119741, Southern Agricultural Economics Association.

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    Keywords

    Agribusiness; Food Security and Poverty;

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