Decomposition of olive oil production growth into productivity and size effects : a frontier production function approach

Abstract

This paper investigates the relative contribution of technical efficiency, technological change and increased input use to the output growth of the Greek olive- oil sector using a stochastic frontier production function approach applied to panel data. A flexible translog functional form is used to represent the underlying production technology and maximum likelihood procedure is implemented to estimate a single time trend model. Empirical results show that the overall efficiency of olive-growing farms in Greece remained stable during the period 1987-1993, while an inquiry into the sources of production growth shows that the contribution of conventional inputs was the main source of that growth, since total factor productivity increased in a slow rate during the study period.