Price Margins and Capital Adjustment: Canadian Mill Products and Pulp and Paper Industries
AbstractThe purpose of this paper is to estimate a model incorporating noncompetitive behaviour in product and factor markets, In addition, capital accumulation is subject to adjustment costs so that firms are not constrained to be in long-run equilibrium. The model is applied to two major Canadian manufacturing industries: pulp and paper and mill products. The results show for both industries in each of the three product markets and the wood input market that there is competitive behaviour. In addition, the industries are not in long-run equilibrium as marginal adjustment costs cause marginal profit to exceed the rental rate on capital. With the industries exhibiting short-run competitive behaviour in product and factor markets, new estimates are derived for scale economies and rates of technological change. Unlike the results from other studies, both industries exhibit small scale economies and positive rates of technological change.
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Bibliographic InfoPaper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 91-07.
Length: 25 pages
Date of creation: 1991
Date of revision: Sep 1992
Publication status: Published: – revised version in International Journal of Industrial Organization, Vol. 10, No. 3 (September 1992), pp. 491–510
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Other versions of this item:
- Bernstein, Jeffrey I., 1992. "Price margins and capital adjustment : Canadian mill products and pulp and paper industries," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 491-510, September.
- Jeffrey I. Bernstein, 1992. "Price Margins and Capital Adjustment: Canadian Mill Products and Pulp and Paper Industries," NBER Working Papers 3982, National Bureau of Economic Research, Inc.
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- D2 - Microeconomics - - Production and Organizations
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