the model. In later years, the estimates are negative and more in line with ABARES results and expectations. and Williams’ (1982) estimates of price elasticities of demand with respect to import prices were negative, indicating that imported timber and domestically produced timber are complements rather than substitutes. However, over the sample period domestic timber used in housing was predominantly hardwood and imported timber was primarily softwood. As such, the domestically produced and imported timber had different physical properties and were therefore not material substitutes. Ignoring any bias, these previous estimates imply demand for timber is somewhat unresponsive to price changes. The range of ABARES estimates of own-price elasticities of structural pine demand are broadly consistent with these findings albeit somewhat lower. However, taking into account the downward trend in estimated elasticities over time and potential bias, ABARES estimates appear to be consistent with what might be expected using more recent data. International studies Numerous studies present estimates of price elasticities of demand for structural timber in other countries. The majority of these studies focus on demand in North American markets, and employ a range of estimation methods, assumptions and datasets (Table 4 and Table 5). Table 4 Estimates of own-price elasticities of demand for softwood sawnwood, international Source Time Comments Elasticity frame estimate (%) McKillop, US softwood lumber wholesale price index –0.17 Stuart & Geissler (1980) Waggener, US softwood lumber price –0.35 Gerard & Howard (1978) Adams US softwood lumber index, 1 year lag –0.08 (1977) Spelter 1950 US softwood lumber price –0.29 (1985) 1960 –0.16 1970 –0.13 1980 –0.11 US softwood lumber price –0.88 –0.39 Rockel & US Douglas fir wholesale price index –0.91 Buongiorno (1982) Robinson Douglas fir price –0.88 (1974) Gellner, US softwood lumber –0.38 Constantino Canadian softwood lumber price –0.54 & Percy (1990)
the model. In later years, the estimates are negative and more in line with ABARES results and expectations. and Williams’ (1982) estimates of price elasticities of demand with respect to import prices were negative, indicating that imported timber and domestically produced timber are complements rather than substitutes. However, over the sample period domestic timber used in housing was predominantly hardwood and imported timber was primarily softwood. As such, the domestically produced and imported timber had different physical properties and were therefore not material substitutes. Ignoring any bias, these previous estimates imply demand for timber is somewhat unresponsive to price changes. The range of ABARES estimates of own-price elasticities of structural pine demand are broadly consistent with these findings albeit somewhat lower. However, taking into account the downward trend in estimated elasticities over time and potential bias, ABARES estimates appear to be consistent with what might be expected using more recent data. International studies Numerous studies present estimates of price elasticities of demand for structural timber in other countries. The majority of these studies focus on demand in North American markets, and employ a range of estimation methods, assumptions and datasets (Table 4 and Table 5). Table 4 Estimates of own-price elasticities of demand for softwood sawnwood, international Source Time frame Comments Elasticity estimate (%) McKillop, Stuart & Geissler (1980) US softwood lumber wholesale price index –0.17 Waggener, Gerard & Howard (1978) US softwood lumber price –0.35 Adams (1977) US softwood lumber index, 1 year lag –0.08 Spelter (1985) 1950 US softwood lumber price –0.29 1960 –0.16 1970 –0.13 1980 –0.11 US softwood lumber price –0.88 –0.39 Rockel & Buongiorno (1982) US Douglas fir wholesale price index –0.91 Robinson (1974) Douglas fir price –0.88 Gellner, Constantino & Percy (1990) US softwood lumber –0.38 Canadian softwood lumber price –0.54
ResponsivenessDemandStructuralPine_v1.0.0.docx