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Advertising and Retail Promotion of Washington Apples: A Structural Latent Variable Approach to Promotion Evaluation

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  • Richards, Timothy J.
  • Gao, Xiaoming
  • Patterson, Paul M.

Abstract

"Commodity promotion" consists of many activities, each designed to contribute to a consumer's product knowledge or influence tastes. However, both knowledge and tastes are unobservable, or latent, variables influencing demand. This paper specifies a dynamic structural model of fresh fruit demand that treats promotion and other socioeconomic variables as "causal" variables influencing these latent variables. Estimating this state-space model using a Kalman filter approach provides estimates of both the system parameters and a latent variable series. The results show that these latent effects contribute positively to apple and other fruit consumption, while reducing banana consumption.

Suggested Citation

  • Richards, Timothy J. & Gao, Xiaoming & Patterson, Paul M., 1998. "Advertising and Retail Promotion of Washington Apples: A Structural Latent Variable Approach to Promotion Evaluation," Working Papers 28547, Arizona State University, Morrison School of Agribusiness and Resource Management.
    • Handle: RePEc:ags:asumwp:28547
    DOI: 10.22004/ag.econ.28547
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    1. Richards, Timothy J. & Patterson, Paul M., 2003. "A Bilateral Comparison Of Fruit And Vegetable Consumption: U.S And Canada," 2003 Annual meeting, July 27-30, Montreal, Canada 21891, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Okrent, Abigail M. & Alston, Julian M., 2011. "Demand for Food in the United States: A Review of Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," Monographs, University of California, Davis, Giannini Foundation, number 251908, December.
    3. Quagrainie, Kwamena K. & McCluskey, Jill J. & Loureiro, Maria L., 2001. "Reputation And State Commodity Promotion: The Case Of Washington Apples," 2001 Annual meeting, August 5-8, Chicago, IL 20592, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Catherine Durham & James Eales, 2010. "Demand elasticities for fresh fruit at the retail level," Applied Economics, Taylor & Francis Journals, vol. 42(11), pages 1345-1354.
    5. Acharya, Ram N. & Molina, Ignacio, 2004. "Testing For A Change In Consumer Tastes For Fresh Fruits And Vegetables: A Structural Latent Variable Approach," 2004 Annual meeting, August 1-4, Denver, CO 20127, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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