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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3982.
Date of creation: Jan 1992
Date of revision:
Publication status: published as International Journal of Industrial Organization 10, pp. 491-510 (1992).
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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.
- Jeffery Bernstein, 1991. "Price Margins and Capital Adjustment: Canadian Mill Products and Pulp and Paper Industries," Carleton Economic Papers 91-07, Carleton University, Department of Economics, revised Sep 1992.
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- D2 - Microeconomics - - Production and Organizations
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