Estimation Of Source Differentiated Import Demand Function Of Black Tea In Pakistan
Author: Kashif Nabi

Pakistani tea market is one of the largest tea import markets as it ranked third among the world import markets for tea. Nevertheless, there is no economic research has been done on Pakistan tea market. Accordingly, this paper is the first study analysing the Pakistan import demand for tea differentiated by source of production. Thus, the source differentiated Almost Ideal Demand System (SDAIDS), in which sources of tea are differentiated and the expenditure is treated as endogenous, has been adopted. Pakistan imports average 85% of black tea imports from these five countries. To estimate SDAIDS parameters data required on three variables, Prices for every import origin, expenditure share of a particular country in the overall black tea import and overall expenditure on black tea import. The data of import quantity (measure in metric tons) and Cost, Insurance, and Freight (CIF) import values (measure in thousand Pakistani rupees) is obtained from (PBS) publications. The results showed that Pakistani tea consumers are more sensitive to prices and all of the countries have expenditure elasticities positive and greater than one except Kenya. The share of Kenya for the last 10 to 15 years is continuously increasing while the share of the other tea exporters to Pakistan is fluctuating. Despite the advantage of PSFTA, Sri-Lanka continued to face fierce competition for the Pakistan export market from the Kenya and Other countries. Furthermore Sri Lanka has opportunity to increase their exports to Pakistan by removing trade barriers rather than price reduction. Indonesia and Tanzania has the largest expenditure elasticity and high own-price elasticity indicating that both encountered sever competition in the Pakistani market. Both of them have to adopt Price decrease policy to increase their share. Supervisor:- Prof Dr. Abdul Jalil

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Supervisor: Abdul Jalil

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