SUPPLY RESPONSE IN SWEDISH GREENHOUSE PRODUCTION: THE CASE OF TOMATOES AND CUCUMBERS

The paper presents an attempt to estimate the supply response of two Swedish greenhouse vegetables, tomatoes and cucumbers, to price changes for the years 1979–83. No previous Swedish studies are available and the international literature does not appear to have very much to offer by way of comparison.

The data employed consist of a pooled time-series, cross-section sample obtained from the leading wholesale buyer of vegetables.
The theoretical basis is the Nerlove partial adjustment model, which is estimated by means of a least squares with dummies technique for three different price specifications: relative prices (tomato/cucumber and vice versa), deflated prices (consumer price index) and nominal prices.

The results indicate that neither tomatoes nor cucumbers respond elastically to price changes, short-run elasticities being around 0.25 for tomatoes (nominal prices) and 0.53 for cucumbers (deflated prices) and long-run elasticities amounting to 0.52 and 0.86, respectively.
The substitutability at the margin of the two crops in production appears to be very limited at best, coefficients for relative prices having the wrong signs and being insignificant.

VIII Symposium on Horticultural Economics

L. Ekelund, M. Lundahl

https://doi.org/10.17660/ActaHortic.1984.155.25