Italian Competitiveness in the Trade of Fruit and Vegetables: A semiflexible Mixed Import Demand System

This paper analyzes the structure of import demand for fresh and processed fruit and vegetables in Germany and the United Kingdom, and the implications for Italian exports, especially of fresh goods. The import demand model differentiates products by origin; a mixed demand system is adopted, according to prior beliefs on the nature of the market, using a Rotterdam semiflexible specification. Estimation results provide interesting implications for Italian exporters. Italian products suffer a negative trend in preferences in the United Kingdom, but not in Germany. Elasticity estimates show that price and expenditure effects are still important, as pointed out also by market experts. Import demand does not appear to be stagnant, and good market opportunities are still present for fresh products, though strong substitutability sharpens competition. Common non-price strategies may play a crucial role in the competitive strength on export markets.