The importance of saffron as a valuable export product in national and international economies is gradually becoming apparent. An investigation of difficulties of export along with factors affecting it, can contribute to maintain Iran’s status as the greatest saffron producer and exporter in the world markets. In this research, a dynamic econometric model of saffron export market that shows the simultaneity of price and export quantity was introduced. The model of export demand and supply was estimated using three Stage Least Square methods for the period of 1974 to 2000. The results of estimation of export demand function showed that, demand was elastic as a function of export price. Price elasticity was estimated to be -2.1. Income elasticity of demand was also greater than unity and estimated to be around 1.2. The results also showed that the export demand as a function of real exchange rate was inelastic (-0.88). As a whole, this variable had a negative effect on the volume of Iranian saffron export. The export supply function as relative to price and domestic production was elastic. Therefore, increasing export price relative to domestic price along with an expansion of saffron production capacity would result in an increased export supply of saffron.
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