Files
Abstract
The objective of this paper is to estimate the short run and long run own- price elasticity of
pesticide demand in Greece in a profit maximization context. A single equation approach is
adopted and the dynamic aspects of pesticide demand are captured by the use of cointegration
techniques. The policy implications of the empirical findings concern the price responsiveness
of pesticide demand in Greece to potential changes in pesticide price due to the imposition of
an environmental tax on that polluting input. The estimated short run elasticity of pesticide
demand is -0.8 whereas the long run estimate is slightly larger, approximately -0.9. The short
run pesticide elasticity with respect to output price is 1.58 and the long run 1.75 both highly
elastic estimates. The reduction of output prices may thus be expected to bring about a larger
reduction in pesticide use than the imposition of a tax on that input.