Estimating Effects of Input and Output Prices on Inputs Demand in Punjab Agriculture - A Profit Function Approach

Increased use of inputs allows agricultural sector to move up along production surface by increasing yield per unit area. Their utilization also induces on upward shift in the production function to the extent the technological change is embodied in them. Given the technology, input and output prices determine the quantities of various inputs allocated among different crops. Reliable empirical knowledge of factors effecting the use of inputs is prerequisite for formulation of agricultural price policy and policies regarding factor employment. In this context this study was undertaken (i) to estimate the systems of input demand equations for major crops of Punjab; (ii) to compare the inter and intercrop effects of changes in input-output prices and some other exogenous variables in input use; (iii) to study the effects of price changes on growth of input demand.