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

Timothy J. Richards, X.M. Gao and Paul M. Patterson

Journal of Agricultural and Applied Economics, 1999, vol. 31, issue 1, 15-28

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.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:cup:jagaec:v:31:y:1999:i:01:p:15-28_02

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