Skip to main content

The Law of One Price in United Kingdom Soft Sawnwood Imports--A Cointegration Approach

Buy Article:

$29.50 plus tax (Refund Policy)


The law of one price states that prices of homogenous commodities, defined in a common currency, are equal throughout the world. It implies cointegration of prices. In the present study, the law was tested for imports of soft sawnwood to the United Kingdom from Finland, Sweden, Canada, and Russia using the concept of cointegration. The data are quarterly and cover the period 1978-1992. The study used the multivariate cointegration method of Johansen instead of the bivariate method commonly used in earlier studies. The existence of the law was tested simultaneously for all four import prices and separately for pairs of prices. The results do not support the "law" but instead indicate the existence of differences over the long run between different suppliers' sawnwood prices. This suggests that imperfect competition models should be used in explaining and forecasting UK sawnwood imports. The results also raise an important issue concerning testing for competition in forest products markets, which is not usually done in connection with the modeling of markets. For. Sci. 44(1):17-23.

Keywords: Forest products; Johansen's method; international trade; unit root econometrics

Document Type: Journal Article

Affiliations: Researcher of Forest Economics, Forest Research Institute, Helsinki Research Centre, Unioninkatu 40 A, 00170 Helsinki, Finland. Phone: +358 9 85705746;, Fax: +358 9 85705717

Publication date: February 1, 1998

More about this publication?
  • Membership Information
  • ingentaconnect is not responsible for the content or availability of external websites

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
Cookie Policy
ingentaconnect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more