An Econometric Study of the Demand for Fertilizers in Pakistan

Mahmood A. Ayub


An empirical study of the demand for fertilizers in Pakistan
is important for at least two reasons. First, we can identify the
various factors responsible for the determination of demand. This will
obviously depend to a large extent on the arguments we include in the
demand function and the mathematical specification of the model.
Nevertheless, one can obtain a rough idea of the importance of the
various factors in the total demand for fertilizers. Second, a study of
the demand side will enable us to obtain some estimates of the price
elasticity of demand. Knowledge of price elasticity is extremely
essential from the government policy point of view because the sale of
fertilizers in Pakistan has been subsidized, and it is, therefore,
essential to know the degree of respon-siveness of fertilizer demand to
price changes. Despite the crucial importance for policy measures,
hardly any econome┬Čtric study of the demand for fertilizers has been
carried out in Pakistan. To the best of my knowledge, P.L. Leonard [5]
is the only one who has attempted to carry out such a study for
Pakistan. The aim of this paper is, therefore, to quantify the degree of
importance of the various factors in the fertilizer demand of Pakistan.

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