The Distribution of New Wheat Varieties in the Pakistan Punjab: The Role and Functioning of Institutions

Abstract

This case study concerns the technology choice of farmers in the Pakistan Punjab with regard to wheat varieties. It argues that profitability of new crop technologies can only partly explain their adoption, as access to inputs limits the choice of farmers. In Pakistan, access to inputs is limited due to market structures and associated institutional factors. In applied microeconomics, technology choice is commonly estimated with the use of adoption models: the (expected) profitability of prevailing and the new technologies are compared, and it is assumed that the farmers opt for the most profitable one (taking account of risk aversion and incomplete information). A simplification often made is to assume that everyone has unlimited access to all relevant goods and services. In this paper the latter assumption is tested. More specifically, the paper is concerned with the consequences of limits due to the organisational infrastructure of markets.