United States demand for hardwood plywood imports by country of origin.

Abstract

Empirial models were obtained for the US demand for hardwood plywood imports from Korea, Taiwan, Japan, the Philippines, and the rest of the world. The models rested on the assumption that imports from different countries are not perfect substitutes and that there exists a constant elasticity of substitution (CES) index of total imports. An elasticity of substitution of 1.74 (+-0.22) was estimated using data for the period January 1974 to December 1979. A model of the aggregate demand for imports was estimated, leading to a price elasticity of -2.20 (+-0.22). Own-price and cross-price elasticities were then obtained from the elasticity of substitution, the share of each country in the US market, and the elasticity of total imports with respect to price. Own-price elasticities ranged from -1.95 for Korea to -1.77 for the Philippines. Own-price and cross-price elasticities were decomposed into a market expansion effect, measuring the impact of the rise in price of a particular country on total US hardwood plywood imports, and a substitution effect measuring the price-induced substitution of imports from one country by those from other countries.-Authors