An Economic Analysis of Supply Response in the California-Arizona Lemon Industry

Published in 1979

This thesis analyzes the supply response that has taken place in the California-Arizona lemon industry from 1954 through 1978. The industry has operated under the Federal Lemon Marketing Order since 1941. Two models of aggregate-level supply response were developed. The first model comprises identities for production and for bearing acreage, and equations for yield, plantings, and removals. Lack of data limited the model to being estimated by a reduced-form equation. The estimated equations were statistically insignificant due to too few degrees of freedom and the extensive use of proxies. 

The second model considered the expected profits of lemons and the expected profits of oranges, the major alternative crop, as determining bearing acreage. The estimation equations in this model were considered satisfactory and predictions were made of bearing acreage,
yield and production. Model projections for 1977 to 1983 were compared to those made during the annual meetings of the California-Arizona Citrus League. The two sets of projections compare closely with each other and
with the available historical data. 

The thesis concludes with a discussion of an allocation model that could be used to evaluate the economic impacts of the Lemon Marketing Order.

AZU_TD_BOX300_E9791_1979_456.pdf (1.74 MB)

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