The factors influencing corrugated board supply and demand In Iran: Simultaneous equations models

Corrugated board is considered as a valuable commodity for packaging at both international and domestic markets. Therefore, for the development of corrugated board production industry in Iran and understanding the variation in demand and supply for this product, it is necessary to identify the consumption and production patterns as well as the most important and effective variables on its status. Based on this information, forecasting the future situation will be possible. In this study, due to the existence of reciprocal relation between demand and supply, the simultaneous equations system was used. Coefficients of the model were estimated applying 3-stage least squares (3SLS) procedure with the time series data from the duration of 1981 to 2007. The study results indicated that in the demand function, the variables including, intercept, GNP in previous period, population, consumer price index (CPI), added value of industrial sector (AVOIS), the war dummy is significantly influential at 0.05% level. However, the price variable did not show any effect that indicates that this product is a necessity good. In the supply function, intercept, consumption, production and imports quantities in previous period, inflation rate and price in previous period simultaneously influence corrugated board production. The absence of any relation between product price/raw material price ratio and production also proves that the corrugated board is a necessary good, because the impacts of explanatory variables on its supply and demand are consistent with economic theories.   Key words: Simultaneous, supply, demand, corrugated board, Iran.