(1970-71 to 2006-07)

This study using the Nerlovian model has estimated the responses of cotton, wheat and sugarcane crops ’ area to changes in their prices and other relevant factors in Pakistan. Time period covered in the analysis relates from 1970-71 to 2006-07. The coefficients of the area response models for respective crops were estimated through the Ordinary Least Squares method. The short run price elasticity of cotton area has been estimated at 0.263 while the long run price elasticity works out to 1.09. The short run price elasticity of wheat area during the study period has been calculated at 0.045 while the long run price elasticity comes to 0.105. The short run price elasticity of sugarcane has been calculated at 0.229 while long run elasticity comes to 0.653. The conclusion of all this discussion is that there are powerful monopolies or oligopolistic structures in cotton, wheat, and sugarcane markets which distort the incentives for the producers resulting in wasteful and inefficient use of national resources. There is need to remove these distortions and correct market imperfections so as to make best use of the available resources and increase farm production and improve our competitiveness in world markets