Saffron is a strategic agricultural product for Iran. The combination of appropriate land, ideal weather conditions, and low wages give Iran a comparative advantage in its production. The cultivated area and production of saffron have increased dramatically over the past two decades, providing crucial increases in farmer income and employment. Saffron cultivation has expanded in many provinces; the Khorasan province is the biggest producer of saffron. This analysis uses panel data to increase the number of observations, variability and degrees of freedom and, at the same time, to decrease collinearity among explanatory variables. In addition, panel data models control for individual heterogeneity and are able to study the dynamics of adjustment.

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