Quantifying Gains To Risk Diversification Using Certainty Equivalence In A Mean-Variance Model: An Application To Florida Citrus

Allen Featherstone and Charles Moss

Journal of Agricultural and Applied Economics, 1990, vol. 22, issue 2, 191-197

Abstract: The marginal benefit and cost of diversification for Florida orange producers is analyzed using certainty equivalents. Results indicate that for moderate and high levels of risk aversion, diversification into strawberry, grapefruit, or additional orange production is not optimal. However, moderately risk averse Florida orange producers can gain by diversifying into grapefruit production if the annual amortized fixed costs can be reduced by as little as 10 percent.

Date: 1990
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Journal Article: QUANTIFYING GAINS TO RISK DIVERSIFICATION USING CERTAINTY EQUIVALENCE IN A MEAN-VARIANCE MODEL: AN APPLICATION TO FLORIDA CITRUS (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jagaec:v:22:y:1990:i:02:p:191-197_00

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