Domestic Prices of Imports in Pakistan: Extension of Empirical Findings

The main purpose of this study is to supplement the empirical findings of an earlier paper by the author on the domestic prices of imports in Pakistan [8]. In order to determine the factors which influence the prices of imports in Pakistan, some selected commodities were studied in the earlier paper and it has been found that, due to the presence of direct controls on supply, the im¬ porters could earn an excess profit and the licensing system was the main deter¬ minant of the domestic prices of imports at the margin. Changes in duty levels did not have any effect on domestic prices up to a limit defined by the extent of the excess profit” ” Since the study cited was completed, there have been some significant changes in the import policy of Pakistan. “Liberalisation” of imports was broadened with the expansion of the “free list”. In Section I of this paper an attempt has been made to determine the effects of free list imports on the supply and prices of imports, and on the mark-ups of importers.