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.

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Year of publication:	1990
Authors:	Featherstone, Allen M. ; Moss, Charles B.
Published in:	Southern Journal of Agricultural Economics. - Southern Agricultural Economics Association - SAEA. - Vol. 22.1990, 02
Publisher:	Southern Agricultural Economics Association - SAEA
Subject:	Risk and Uncertainty

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Extent:	application/pdf
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005460174