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Examining consumer response to commodity-specific and broad-based promotion programs for fruits and vegetables using experimental economics

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Author Info

  • Rickard, Bradley J.
  • Liaukonyte, Jura
  • Kaiser, Harry M.
  • Richards, Timothy J.

Abstract

Generic promotion and advertising activities have traditionally been used to promote individual agricultural commodities. However, there is renewed interest in implementing a mandatory ―broad-based‖ promotion program for all fruits and vegetables, and this idea is highly controversial among those in the horticultural industry. Here we use data from an experiment that introduces subjects to various promotional efforts for fruits and vegetables to estimate the direct and indirect effects of advertising. Econometric results indicate that commodity-specific promotional efforts may be less effective at increasing demand for fruits and vegetables than earlier studies have suggested, yet such campaigns do appear to have a significant clockwise rotational effect on the demand for fruits and vegetables. Broad-based advertising does have a direct effect on the demand for fruits and vegetables, and after controlling for various demographic differences between treatments our results show that average willingness-to-pay for fruits and vegetables was 41% higher among subjects in the broad-based group compared to the control group.

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File URL: http://purl.umn.edu/126965
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Bibliographic Info

Paper provided by Cornell University, Department of Applied Economics and Management in its series Working Papers with number 126965.

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Date of creation: 2010
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Handle: RePEc:ags:cudawp:126965

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Related research

Keywords: Advertising; Experimental economics; Fruits and vegetables; Willingness to pay; Consumer/Household Economics; Marketing; Production Economics; M37; Q13;

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  1. Ackerberg, Daniel A, 2001. "Empirically Distinguishing Informative and Prestige Effects of Advertising," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 316-33, Summer.
  2. Todd M. Schmit & Harry M. Kaiser, 2004. "Decomposing the Variation in Generic Advertising Response over Time," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 139-153.
  3. David P. Myatt & Justin P. Johnson, 2004. "On the Simple Economics of Advertising, Marketing, and Product Design," Economics Series Working Papers 185, University of Oxford, Department of Economics.
  4. Julian M. Alston & John W. Freebairn & Jennifer S. James, 2001. "Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 888-902.
  5. Kenji Adachi & Donald J. Liu, 2010. "Estimating Threshold Effects of U.S. Generic Fluid Milk Advertising," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(3), pages 727-739.
  6. Bernard ELYAKIME & Jean-Jacques LAFFONT & Patrice LOISEL & Quang VUONG, 1994. "First-Price Sealed-Bid Auctions with Secret Reservation Prices," Annales d'Economie et de Statistique, ENSAE, issue 34, pages 115-141.
  7. Loureiro, Maria L. & Umberger, Wendy J., 2003. "Estimating Consumer Willingness to Pay for Country-of-Origin Labeling," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(02), August.
  8. Philip R. Vande Kamp & Harry M. Kaiser, 1999. "Irreversibility in Advertising-Demand Response Functions: An Application to Milk," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 385-396.
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