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Incorporating Data and Theory in Roundwood Supply and Demand Estimation
Author(s) -
Hetemäki Lauri,
Jari Kuuluvainen
Publication year - 1992
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1243199
Subject(s) - economics , pulpwood , stumpage , supply , econometrics , derived demand , capital (architecture) , supply and demand , complement (music) , wage , microeconomics , price elasticity of demand , demand curve , agricultural economics , labour economics , pulp and paper industry , engineering , biochemistry , chemistry , phenotype , archaeology , complementation , gene , history
This paper examines the aggregate pulpwood market in Finland using the econometric approach advocated by Hendry, Neale, and Joba and Spanos, who propose a statistically consistent way to estimate simultaneous‐equations models. Private nonindustrial timber supply is estimated along with a three‐input demand function (capital, labor, and wood). Results indicate that short‐term supply reacts positively to an increase in stumpage price, while the long‐term (total) elasticity is negative and small in absolute terms. Capital is a complement while labor is a substitute for roundwood input. Dynamic adjustment process, substitution and cross‐price effects, and capital market imperfections implied by the present study differ from those obtained in previous research.