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Abstract
An econometric model of the West Bank olive subsector was constructed for the period
1968-85, to provide a means of assessing the technical and behavioural forces that regulate
the supply of and demand for green olives. A system of demand-and-supply equations was
estimated using the two-stage least-squares (2SLS) procedures. Farm prices of green olives
were found to be significantly related to quantity and per-head food expenditures. A
reduced-form solution to the structural model was derived to test the forecasting ability of the
model to predict the endogenous variables when the exogenous variables are given. The
model was used to determine the allocation of the West Bank olives which could maximize
returns to growers. The model should be both a useful tool for policy makers and of practical
value to decision makers in the olive industry.