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

Mark G. Brown and Thomas Spreen

International Journal on Food System Dynamics, 2010, vol. 01, issue 01, 9

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

Keywords: Agribusiness; Food Security and Poverty (search for similar items in EconPapers)
Date: 2010
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: The Allocation of Advertising and Research Dollars in the Florida Orange Juice Industry (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ijofsd:91140

DOI: 10.22004/ag.econ.91140

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