Abstract
Orange-juice demand is related to generic advertising through a psychological stock variable, which in turn is specified as a function of advertising quality. A double log demand model is used, allowing diminishing returns to advertising, and a solution to the problem of taking the log of zero stock is considered. The empirical analysis examines variation in the impact of orange-juice advertising across regions. Results suggest that health messages of advertising were effective in increasing the demand for orange juice, with the effectiveness varying from region to region. On average, generic advertising was estimated to increase orange-juice demand by about 6.9%.
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