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Examining consumer response to commodity-specific and broad-based promotion programs for fruits and vegetables using experimental economics

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Abstract

Generic promotion and advertising activities have traditionally been used to promote individual agricultural commodities. However, there is renewed interest in implementing a mandatory ?broad-based? promotion program for all fruits and vegetables, and this idea is highly controversial among those in the horticultural industry. Here we use data from an experiment that introduces subjects to various promotional efforts for fruits and vegetables to estimate the direct and indirect effects of advertising. Econometric results indicate that commodity-specific promotional efforts may be less effective at increasing demand for fruits and vegetables than earlier studies have suggested, yet such campaigns do appear to have a significant clockwise rotational effect on the demand for fruits and vegetables. Broad-based advertising does have a direct effect on the demand for fruits and vegetables, and after controlling for various demographic differences between treatments our results show that average willingness-to-pay for fruits and vegetables was 41% higher among subjects in the broad-based group compared to the control group.

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WP 2010-12 July 2010

JEL Classification Codes: M37; Q13

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2010-07-01

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Charles H. Dyson School of Applied Economics and Management, Cornell University

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