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A Family of Differential Input Demand Systems with Application to Greek Agriculture

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  • Panos Fousekis
  • Christos Pantzios

Abstract

This paper develops a family of input demand systems via alternative parametrisations of Theil's differential model. Each member of this family is as flexible as any other locally flexible functional form. More importantly, selection among the competing family members is possible via simple parameter restrictions. The family of differential input demand systems is applied to the agricultural sector in Greece for the period 1961–96. Formal tests suggest that the model with the CBS‐type effects dominates the alternative models. Divisia and price elasticities are calculated from the selected model and a decomposition of changes in the demand for inputs into technical change, total input volume, substitution, and residual effects is performed. The empirical results are quite reasonable. Overall, the analysis in this paper indicates that, in certain cases, the differential approach may provide an attractive alternative to the dual approach in modelling production behaviour.

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  • Panos Fousekis & Christos Pantzios, 1999. "A Family of Differential Input Demand Systems with Application to Greek Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 549-563, September.
    • Handle: RePEc:bla:jageco:v:50:y:1999:i:3:p:549-563
    DOI: 10.1111/j.1477-9552.1999.tb00898.x
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    Cited by:

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    3. Msangi, Siwa & Rosegrant, Mark, 2007. "A Closer Look at the IMPACT of Climate Change on Country-Level Food Security and Nutrition," Conference papers 331635, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Suh, Dong Hee & Moss, Charles B., 2014. "Exploring Agricultural Production Systems: Interactions between the Crop and Livestock Sectors," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170149, Agricultural and Applied Economics Association.

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