Regional Log Market Integration in New Zealand
AbstractIn this paper the integration of log prices across four regions in New Zealand was assessed. A time series of prices for six Radiata Pine (Pinus radiata D. Don) log grades in each of the regions were tested for co-integration using Johansen’s method and Engle-Granger pair wise tests. Prices for export grades display significant integration across regions and generally follow the law of one price. However, markets for domestic grades tend to be regionally segregated. These results are most likely due to the high costs of transporting logs between regions. Future modelling will need to incorporate such transportation costs in order to adequately characterise log markets in the country.
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Bibliographic InfoPaper provided by University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group in its series Working Papers with number 2008-03.
Length: 21 pages
Date of creation: Mar 2008
Date of revision:
log market; co-integration; law of one price;
Find related papers by JEL classification:
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
- R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
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- Yin, Runsheng & Newman, David H. & Siry, Jacek, 2002. "Testing for market integration among southern pine regions," Journal of Forest Economics, Elsevier, vol. 8(2), pages 151-166.
- Christopher B. Barrett, 1996. "Market Analysis Methods: Are Our Enriched Toolkits Well Suited to Enlivened Markets?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 825-829.
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