Producer Behavior and Technology in the Pulp and Paper Industries of the United States and Canada: A Nonparametric Analysis

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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.

Keywords: Forest products; cost; econometrics; forest industries; production; profit; technological change

Document Type: Journal Article

Affiliations: Professor, Department of Forestry, University of Wisconsin-Madison, 1630 Linden Drive, Madison, WI 53706

Publication date: February 1, 1995

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
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