Armington Elasticities and Induced Industrial Roundwood Specialization in Europe
2012
Lundmark, Robert | Shahrammehr, Shima
We estimate Armington elasticities for industrial roundwood in eight European countries for the period 1961–2007, and analyze how the estimated elasticities change over time. Results indicate increasing differentiation between domestic and imported volumes during the first half of the time period. However, for the latter half, a decreasing degree of specialization is observed. A plausible explanation is the removal of trade barriers during development of the internal European market. This trend of decreasing specialization is arguably going to continue in the future. For instance, the technical feasibility of using more heterogeneous feed-stock in the paper industry is increasing. Moreover, energy and climate policy is stimulating the use of wood as fuel in the energy sector. These changes in technology and new uses might further decrease the differentiation between domestic and imported industrial roundwood.
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