An econometric analysis of the olive oil market in Italy

Abstract

The paper analyses the olive oil market in Italy. In the specified model, consumption and import demands form conditional demand systems and the relevant policy variables are endogenous. Empirical evidence based on a three fat AIDS shows that olive oil is elastic with respect to the group expenditure, that olive oil, seed oils and butter behave like net substitutes and as gross complements, and that olive oil conditional demand is rather reactive to its own price. The policy multipliers support answers which are coherent with the assumptions, but contradict common opinions. In particular, sectoral instruments are not that effective in enhancing the market.