Impact of Length-of-Run on Price Elasticities for Douglas-fir and Southern Pine Lumber

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Abstract:

Estimates of short-run lumber supply elasticity derived from a published econometric model developed with 1947-70 annual observations were approximately 1.5 for Douglas-fir, Southern pine, and "structural species." The short-run estimates correspond to a 1 year length-of-run under a ceteris paribus (all else constant) assumption. Two indexes of intermediate-run supply response were constructed. These correspond to a 1 year length-of-run where price induced shifts of the short-run supply function are included. Both indexes indicate that intermediate-run supply response is generally less elastic than short-run response, particularly in later years of the sample period. Differences in the increase of raw material prices and increase of industry production capacity between regions and lengths-of-run probably explain these results. Forest Sci. 21:13-22.

Keywords: Econometric model; Pseudotsuga menziesii; price elasticity; supply and demand

Document Type: Journal Article

Affiliations: Forest Economist in Forest Economics and Marketing Research, USDA Forest Service, Washington, D.C.

Publication date: March 1, 1975

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