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Comparative analysis of the production technologies of logging, sawmill, pulp and paper, and veneer and plywood industries in Ontario

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Abstract:

Technological growth in production and efficient utilization of input factors are the two biggest contributors to total factor productivity (TFP). TFP of the four major forest industries (logging, pulp and paper, sawmill, and veneer and plywood industries) of Ontario are compared by analyzing their production structures using duality theory in production and costs. The study uses annual data of output and four inputs — labour, capital, energy and materials — from 1967 to 2003. Different restrictions on the translog cost function are applied to each industry to determine the cost function that best describes each industry’s technology, which is further used to estimate Morishima elasticities of substitution, own-price and cross-price elasticities, rate of technological change, and TFP. The production structure of sawmill and veneer and plywood industries is found to be linear homogeneous and homothetic, and that of logging and pulp and paper industries is non-homothetic. Further, Hicks neutral technological change for all four industries is rejected, indicating that the production structure in all four industries is biased in favour of certain inputs and against others. This suggests that policies that improve the efficiency of each industry should focus on input-saving factors of that industry, thereby improving its competitive position.

Le progrès technologique dans la production et l’utilisation efficace des intrants sont les deux éléments qui contribuent le plus à la productivité globale des facteurs (PGF). La PGF de quatre grandes industries forestières (exploitation forestière, pâtes et papiers, sciage ainsi que placages et contreplaqués) de l’Ontario est comparée en analysant leur structure de production et en utilisant la théorie de la dualité dans la production et les coûts. L’étude utilise les données annuelles de production et de quatre intrants — la main-d’œuvre, le capital, l’énergie et les matières premières — de 1967 à 2003. La fonction de coût translog de chaque industrie est restreinte de différentes façons afin de déterminer la fonction de coût qui décrit le mieux la technologie de chaque industrie. Cette fonction est ensuite utilisée pour évaluer les élasticités de substitution de Morishima, les élasticités-prix et les élasticités-prix croisés, le taux de changement technologique et la PGF. Les structures de production de l’industrie du sciage et de l’industrie des placages et contreplaqués sont linéaires homogènes et homothétiques alors que celles de l’industrie de l’exploitation forestière et de l’industrie des pâtes et papiers ne sont pas homothétiques. De plus, il n’y a pas de progrès technique neutre au sens de Hicks dans les quatre industries, indiquant que leur structure de production favorise certains inputs et en néglige d’autres. Ces résultats indiquent que les politiques visant à améliorer l’efficacité de chaque industrie devraient se concentrer sur les mesures d’économie spécifiques aux intrants que privilégie chaque industrie et ainsi améliorer leur position concurrentielle.

Document Type: Research Article

Publication date: 2011-03-01

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  • Published since 1971, this monthly journal features articles, reviews, notes and commentaries on all aspects of forest science, including biometrics and mensuration, conservation, disturbance, ecology, economics, entomology, fire, genetics, management, operations, pathology, physiology, policy, remote sensing, social science, soil, silviculture, wildlife and wood science, contributed by internationally respected scientists. It also publishes special issues dedicated to a topic of current interest.
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