The price response of major crops in Pakistan: an application of the simultaneous equation model

Abstract

A model is applied to estimate own- and cross-price elasticities of five major crops in Pakistan, viz, wheat, cotton, rice, sugarcane and maize, based on the production and expected wholesale-price data for the period 1957-86. The study found little potential to enhance overall agricultural productivity by increasing the single crop price, since either the own-price elasticities were low or, otherwise, the negative cross-price effects on the production of other crops were high. However, a 10% systematic improvement in terms of trade for agriculture will increase overall agricultural productivity by about 6% in the long run. -from Author