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Dynamic Model of Fresh Fruit Promotion: A Household Production Approach
Author(s) -
Richards Timothy J.
Publication year - 1999
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1244460
Subject(s) - promotion (chess) , spillover effect , commodity , consumption (sociology) , production (economics) , economics , dual (grammatical number) , commission , consumer demand , microeconomics , business , advertising , market economy , art , social science , literature , finance , sociology , politics , political science , law
Many studies consider the dynamic effects of commodity promotion on demand, but few derive the theoretical basis for these effects in a model of optimal consumer behavior. This study develops a dynamic household production model of U.S. fresh fruit consumption, which it uses to evaluate the effectiveness of advertising and promotion expenditures by the Washington Apple Commission. Estimates from a dynamic‐dual Generalized Leontief system show direct advertising to be marginally more effective than retail promotion in increasing apple sales, but advertising has positive spillover effects to sales of other fruits, whereas promotion reduces sales of competing products.