Transient and persistent efficiency: an application to Portuguese wineries

Abstract

The computation of productive efficiency provides key insights for firm managers and policymakers towards improvements in the competitiveness of businesses and industries, namely those that observe firm heterogeneity and high competition, as is the case of wine. Benefiting from Portuguese wineries panel data, this research measures firms’ productive efficiency, decomposing it into transient and persistent. Results allow us to conclude that wineries can boost overall performance through better input management and long-term policies, such as improvements in market regulation and public firm support.

Fractional responses with spatial dependence of Portuguese wineries’ domestic market sales to an exogenous shock (Covid-19)

“…The market characteristics of the Portuguese wine industry allow us to define an econometric production function that represents the technology of all firms, due to technological homogeneity, which should be dependent on a set of intrinsic characteristics and interaction with neighbours, i.e., spatial dependence [12].…”

“…Some agglomeration externalities develop naturally due to spatial proximity between wine producers. For instance, the performance of neighbouring wineries can encourage the diffusion of marketing-related externalities for the entire region [12,13] This poses additional considerations with implications for managers and, even more so, for regulating bodies. Geographical clusters in the Portuguese wine industry are highly directed to collective promotion in third countries and exploring regional tourism activities.…”