Price dynamics in the import wooden bed market of the United States
Imports of wooden beds by the United States have been over one billion dollars since 2005. With a combined market share of more than 60%, China and Vietnam have dominated the import market in recent years. This trade surge has become a serious threat to the domestic furniture industry. Threshold cointegration and an asymmetric error correction model are used to analyze the price dynamics between China and Vietnam. China has been the price leader of the market and its price has been evolving more independently. The transmission between the prices of China and Vietnam has been asymmetric in both the long term and short term. Furniture firms in China and Vietnam adjust prices about two times faster when their profits are squeezed than stretched.
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