A Poor but Efficient Crop: Supply-Side Responses in the Greek Tobacco Sector, 1953-64

Abstract

We analyzed the price elasticities of the Greek tobacco supply at three different levels of analysis (cross-varietal, cross-regional, and two-dimensional) using secondary-level data published by the Greek National Tobacco Board for the years 1953 to 1964. Our panel suggest that the development of postwar Greece’s tobacco sector was largely determined by market forces rather than by state-led purchasing programs. However, market pressures impacted production and sales volume to varying degrees, depending on the tobacco varieties grown in different parts of the country. Given that tobacco was postwar Greece’s most important export crop, and that it was the object of considerable state support, the often-made claim that state interventionism has disincentivized the adaptation of the Greek agricultural sector to evolving markets needs to be revised. Our findings support Shultz’s poor-but-efficient hypothesis regarding farmers.