QUANTIFYING GAINS TO RISK DIVERSIFICATION USING CERTAINTY EQUIVALENCE IN A MEAN-VARIANCE MODEL: AN APPLICATION TO FLORIDA CITRUS

The marginal benefit and cost of diversification for Florida orange producers is analyzed using certainty equivalents. Results indicate that for moderate and high levels of risk aversion, diversification into strawberry, grapefruit, or additional orange production is not optimal. However, moderately risk averse Florida orange producers can gain by diversifying into grapefruit production if the annual amortized fixed costs can be reduced by as little as 10 percent.


Issue Date:
1990-12
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/30002
Published in:
Southern Journal of Agricultural Economics, Volume 22, Number 2
Page range:
191-197
Total Pages:
7




 Record created 2017-04-01, last modified 2018-01-22

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