Abstract
The aim of this study is to appreciate the competitiveness of Tunisian olive oil in the European Union (EU) market by comparing its market power with those of the two main competitors, namely Italy and Spain. For this purpose, we estimate the residual demand elasticity for the main competitor countries in this market. We employ the real exchange rates and producer prices of olive oil as cost shifters, while the real gross domestic product in the EU is used as a demand shifter. Results confirm the imperfect competition in the olive oil European Market. Furthermore, they show that Italy has the highest market power, and Spain come in second position despite its larger market share, while Tunisia has relatively the lowest market power. In addition, the results confirm the connection between export prices of olive oil and cost variables in competing countries. Regarding Tunisian case, results indicate that the export price observes an upward trend when the cost of Italian olive oil rises, due to increased production costs or currency appreciation.
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