Producer Behavior and Technology in the Pulp and Paper Industries of the United States and Canada: A Nonparametric Analysis
Abstract:Nonparametric tests of fundamental economic assumptions were conducted for the pulp and paper industries of Canada and the United States. The method permitted the use of disaggregate data and avoided the imposition of a particular functional form. The validity of the following hypotheses was investigated: cost minimization, profit maximization, technical change (Hicks-neutral or biased), and separability of inputs and outputs. Both deterministic and stochastic tests were applied. The results suggested that cost minimization, or profit maximization in the presence of technical change, could be assumed for both countries, in the long run and the short run. Manifold separability tests suggested that high levels of aggregation for inputs and outputs were possible in modeling the industries of both countries, but that pulp production should be kept as a separate output for Canada. The hypothesis of Hicks-neutral technical change could be accepted for Canada, but seemed questionable for the United States. For. Sci. 41(1):140-156.
Document Type: Journal Article
Affiliations: Professor, Department of Forestry, University of Wisconsin-Madison, 1630 Linden Drive, Madison, WI 53706
Publication date: February 1, 1995
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