The structure of production in Greek agriculture: Elasticities of substitution and derived factor price elasticities

Abstract

The objective of this paper is to measure the own price, the cross price elasticities of derived input demand
and the Allen-Uzawa elasticities of substitution among input pairs for the Greek agricultural sector. A restricted
cost function is used to approximate agricultural technology and two quasifixed inputs are included, which are
capital and a detrimental or ‘nonproductive’ input, namely nitrate pollution. The system which consists of the translog cost function, factor share equations and a revenue share equation is estimated by the method of Seemingly Unrelated Regressions.
Findings indicate that demand is price inelastic for the three variable inputs. Labour is found to be a substitute
for land and for intermediate inputs. Land and intermediate inputs are complements. 

JEL Classifications: Q11, Q12