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Abstract
This study considers the allocation of Florida citrus-grower money between advertising and
research programs to maximize grower revenue net of program costs. The allocation depends
on the impact of advertising on demand and the impacts of research on the cost of production
and supply. A number of studies have estimated the impact of advertising on OJ demand, but
little is known about the impact of research. Research on citrus greening, a disease that has no
known cure, is examined in the present study. There are no past studies to reliably gauge the
impact of this research. The approach taken here is to ask if a given amount of research dollars
is needed to reduce average production costs by certain amount, then what should be spent on
advertising based on past estimates of the elasticity of demand with respect to advertising. The
optimal ratio of advertising to research dollars increases with the advertising elasticity and
declines with the amount of research money needed to reduce average costs. The results of
this study provide a range for this ratio based on different advertising elasticities and amounts
of research dollars needed to reduce production costs. The approach provides an indication of
the importance of advertising given expectations on the research needed to successfully fight
this disease.