Hostname: page-component-78c5997874-fbnjt Total loading time: 0 Render date: 2024-11-14T04:31:07.607Z Has data issue: false hasContentIssue false
  • English
  • Français

New Varieties and the Returns to Commodity Promotion: The Case of Fuji Apples

Published online by Cambridge University Press:  15 September 2016

Timothy J. Richards  and
Paul M. Patterson
Timothy J. Richards
Affiliation:
Morrison School of Agribusiness and Resource Management at Arizona State University
Paul M. Patterson
Affiliation:
Morrison School of Agribusiness and Resource Management at Arizona State University
Get access

Abstract

The Fuji apple variety is relatively new in the U.S. As a new product, questions concern the relative impact of consumer learning by experience, by variety-specific promotion, or by generic apple promotion. A two-stage (LES/LAIDS) model incorporating both types of promotion is used to estimate the effect of generic and variety specific promotion, as well as consumer experience, on the demand for Fuji apples. Estimates show each to have a positive impact, and also show new or specialty apple varieties to be relatively price inelastic, but income elastic. Grower returns to promotion are calculated with an equilibrium displacement model of price changes and producer surplus. Changes in producer surplus provide a base-scenario benefit:cost ratio of 6.33:1.

Type
Articles
Information
Agricultural and Resource Economics Review , Volume 29 , Issue 1 , April 2000 , pp. 10 - 23
Copyright
Copyright © 2000 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alston, J.M., Chalfant, J.A., Christian, J.E., Meng, E., and Piggott, N.E. 1996. “The California Table Commission's Promotion Program: An Evaluation.” Department of Agricultural Economics, University of California, Davis. Davis, CA. Google Scholar
Anderson, R.W. 1979. “Perfect Price Aggregation and Empirical Demand Analysis.” Econometrica 47: 1209–30.Google Scholar
Blackorby, C., Boyce, R., and Russel, R. 1978. “Estimation of Demand System Generated by the Gorman Polar Form: A Generalization of the S-Branch Utility Tree.” Econometrica 46: 345–63.Google Scholar
Brester, G.W., and Schroeder, T.C. 1995. “The Impacts of Brand and Generic Advertising on Meat Demand.” Amer. J. Agr. Econ. 77: 969–979 (November).CrossRefGoogle Scholar
Brown, M., and Heien, D. 1970. “The S-Branch Utility Tree: A Generalization of the Linear Expenditure System” Econometrica 40: 737–47.Google Scholar
Chang, H.S. 1988. “Measuring the Effects of Advertising in Food Demand Subsystems.” Ph.D. Dissertation, Dept. of Agricultural Economics, U. of California-Davis.Google Scholar
Chang, H.S., and Green, R. 1989. “The Effects of Advertising on Food Demand Elasticities.” Can. J. Agr. Econ. 37: 481–94.Google Scholar
Cox, T. 1992. “A Rotterdam Model Incorporating Advertising Effects: The Case of Canadian Fats and Oils.” In Commodity Advertising and Promotion. Kinnucan, H.W., Thompson, S.R., and Chang, H.S., Eds. Ames: Iowa State Press.Google Scholar
Cox, T.L., and Wohlgenant, M.K. 1986. “Prices and Quality Effects in Cross-Sectional Demand Analysis.” American Journal of Agricultural Economics 68: 908–919.Google Scholar
Day, G.S. 1981. “The Product Life Cycle: Analysis and Applications Issues.” Journal of Marketing 45: 60–67.Google Scholar
Deaton, A., and Muellbauer, J. 1980. Economics and Consumer Behavior. Cambridge, U.K.: Cambridge University Press.Google Scholar
Duffy, M.H. 1991. “Advertising in Demand Systems: Testing a Galbraithian Hypothesis.” Applied Economics 23: 485–96.Google Scholar
Ehrlich, I., and Fisher, L. 1982. “The Derived Demand for Advertising: A Theoretical and Empirical Investigation.” American Economic Review 72: 366–388.Google Scholar
Erickson, G.M. 1985. “A Model of Advertising Competition.” J. Marketing Research 22: 297–304 (August).Google Scholar
Feichtinger, G., Hartl, R.F., and Sethi, S. 1994. “Dynamic Optimal Control Models in Advertising: Recent Developments.” Management Science 40: 195–226 (February).CrossRefGoogle Scholar
Gao, X.M., Wailes, E., and Cramer, G. 1995. “A Microeconometric Model Analysis of U.S. Consumer Demand for Alcoholic Beverages.” Applied Economics 27: 59–69.Google Scholar
Gardner, B. 1975. “The Farm-Retail Price Spread in a Competitive Food Industry.” Amer. J. Agr. Econ. 57: 399–409.Google Scholar
Goddard, E.W., and Conboy, P. 1993. “Optimal International Promotion Expenditure for Differentiated Products.” Review of Marketing and Agricultural Economics. 61: 49–61.Google Scholar
Goldman, F., and Grossman, M. 1978. “The Demand for Pediatric Care: An Hedonic Approach.” J. Political Economy 86: 259–280.CrossRefGoogle Scholar
Gorman, W.M. 1959. “Separable Utility and Aggregation.” Economica 27: 469–81.Google Scholar
Hausman, J. 1997. “Valuation of New Goods under Perfect and Imperfect Competition” In Bresnahan, T.F. and Gordon, R.J., eds. The Economics of New Goods National Bureau of Economic Research (NBER) Studies in Income and Wealth, vol. 58. Chicago and London: University of Chicago Press.Google Scholar
Heien, D.M. 1980. “Markup Pricing in a Dynamic Model of the Food Industry.” American Journal of Agricultural Economics 62: 10.Google Scholar
Hoffman, D.L. 1987. “Two-Step Generalized Least Squares Estimators in Multi-Equation Generated Regressor Models.” Review of Economics and Statistics 69: 336–346 (May).Google Scholar
Kinnucan, H.W. 1997. “Middlemen Behaviour and Generic Advertising Rents in Competitive Interrelated Industries.” Australian Journal of Agricultural and Resource Economics 41: 199–207.Google Scholar
Kinnucan, H.W., and Forker, O.D. 1987. “Asymmetry in Farm-Retail Price Transmission for Major Dairy Products.” American Journal of Agricultural Economics 69: 285.Google Scholar
Kinnucan, H.W., Xiao, H., and Hsia, J.C. 1995. “Direct and Spillover Effects of Increased U.S. Beef Promotion.” In Economic Analysis of Meat Promotion Proceedings from the NEC-63 Conference, Denver, CO. pp. 81-96 (June).Google Scholar
Kinnucan, H.W. 1999. “Advertising Traded Goods.” Journal of Agricultural and Resource Economics 24: 38–56 (July).Google Scholar
Kotler, P. 1965. “Competitive Strategies for New Product Marketing over the Product Life Cycle.” Management Science 12: b104–119 (December).Google Scholar
McFadden, D.L., and Train, K.E. 1996. “Consumers’ Evaluation of New Products: Learning from Self and Others.” Journal of Political Economy 104(4): 683–703.Google Scholar
Moschini, G. 1995. “Units of Measurement and the Stone Index in Demand System Estimation.” American Journal of Agricultural Economics 77: 63–68.Google Scholar
Muth, R.E. 1965. “Derived Demand Curve for a Productive Factor and the Industry Supply Curve.” Oxford Economic Papers 16: 221–234.Google Scholar
Nelson, P. 1974. “Advertising as Information.” Journal of Political Economy 82: 729–54 (July/August).Google Scholar
Nerlove, M., and Arrow, K.J. 1962. “Optimal Advertising Policy Under Dynamic Conditions.” Economica 29: 129: 142.CrossRefGoogle Scholar
Parker, D.D., and Zilberman, D. 1993. “Hedonic Estimation of Quality Factors Affecting the Farm-Retail Margin.” Amer. J. Agr. Econ. 75: 458–466 (May).Google Scholar
Pollak, R.A., and Wales, T.J. 1981. “Demographic Variables in Demand Analysis.” Econometrica 49: 1533–51.CrossRefGoogle Scholar
Powers, N.J. 1991. “Marketing Order Impacts on Farm-Retail Price Spreads.” American Journal of Agricultural Economics 73: 507–510.Google Scholar
Powers, N.J. 1995. “Sticky Short-Run Prices and Vertical Pricing: Evidence from the Market for Iceberg Lettuce.” Agribusiness 11: 57–75.Google Scholar
Schroeter, J.R., and Azzam, A. 1991. “Marketing Margins, Market Power, and Price Uncertainty.” American Journal of Agricultural Econimics 73: 990–999.Google Scholar
Sexton, R.J. 1990. “Imperfect Competition in Agricultural Markets and the Role of Cooperatives: A Spatial Analysis.” American Journal of Agricultural Economics 72: 709–720.Google Scholar
Shonkwiler, J.S., and Taylor, T.G. 1988. “Food Processor Price Behavior: Firm-Level Evidence of Sticky Prices.” American Journal of Agricultural Economics 70: 239–243 (May).Google Scholar
Sorger, G. 1989. “Competitive Dynamic Advertising: A Modification of the Case Game.” J. Economic Dynamics and Control 13: 55–80.Google Scholar
United Nations. 1993. Commodity Trade Statistics.Google Scholar
United States Department of Labor, Bureau of Labor Statistics. 1997. Consumer Price Index: Average Price Data. http://stats.bls.gov:80/cgi-bin/dsrv?ap.Google Scholar
United States Department of Labor, Bureau of Labor Statistics. 1997. Employment and Earnings: State and Area. http://stats.bls.gov:80/cgi-bin/dsrv?sa.Google Scholar
United States Department of Energy, Energy Information Administration. 1995-1997. Monthly Energy Review, various issues.Google Scholar
United States Department of Commerce, Bureau of Economic Analysis. 1997. Regional Programs. http://www.bea/doc.gov/bea/dr/spitbl-d.htm.Google Scholar
United States Deparmtent of Commerce, Bureau of Census. 1997. State Population Estimates. http://www.census.gov/population/estimates/state.Google Scholar
Ward, R.W. 1982. “Asymmetry in Retail, Wholesale, and Shipping Point Pricing for Fresh Vegetables.” American Journal of Agricultural Economics 64: 205.Google Scholar
Ward, R.W. 1993. “Washington Apple Advertising: An Update.” Washington Apple Commission Report No. 93#1. Wenatchee, WA. (June).Google Scholar
Washington Apple Commission. 1995-1997a. Market Vu Report Wenatchee, WA. various issues.Google Scholar
Washington Apple Commission. 1995-1997b. Unloads Report Wenatchee, WA. various issues.Google Scholar
Washington Apple Commission/Leemis Market Research. 1995-1997c. Ad Activity Wenatchee, WA. various issues.Google Scholar
Yen, T.Y., and Roe, T.L. 1989. “Estimation of a Two-Level Demand System With Limited Dependent Variables.” Amer. J. Agr. Econ. 71: 85–99.CrossRefGoogle Scholar