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Price margins and capital adjustment : Canadian mill products and pulp and paper industries

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  • Bernstein, Jeffrey I.

Abstract

The 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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(This abstract was borrowed from another version of this item.)
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Suggested Citation

  • 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.
  • Handle: RePEc:eee:indorg:v:10:y:1992:i:3:p:491-510
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    2. Treadway, Arthur B, 1971. "The Rational Multivariate Flexible Accelerator," Econometrica, Econometric Society, vol. 39(5), pages 845-855, September.
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    Citations

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    Cited by:

    1. Elena Huergo, 1998. "Identificación del poder de mercado: estimaciones para la industria española," Investigaciones Economicas, Fundación SEPI, vol. 22(1), pages 69-91, January.
    2. Mei, Bin & Sun, Changyou, 2008. "Assessing Time-Varying Oligopoly and Oligopsony Power in the U.S. Paper Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(03), December.
    3. Ulrich Doraszelski & Mark Satterthwaite & Lauren Xiaoyuan Lu & David Besanko, 2009. "Lumpy Capacity Investment and Disinvestment Dynamics," 2009 Meeting Papers 106, Society for Economic Dynamics.
    4. Diana M. Burton & Irma A. Gomez & H. Alan Love, 2011. "Environmental Regulation Cost and Industry Structure Changes," Land Economics, University of Wisconsin Press, vol. 87(3), pages 545-557.
    5. Besanko, David & Doraszelski, Ulrich & Lu, Lauren Xiaoyuan & Satterthwaite, Mark, 2008. "Lumpy Capacity Investment and Disinvestment Dynamics," CEPR Discussion Papers 6788, C.E.P.R. Discussion Papers.
    6. Isayenko Oleksiy & Maryanchyk Ivan, 2006. "Market power in oligopoly: The case of the Ukrainian cement industry," EERC Working Paper Series 06-06e, EERC Research Network, Russia and CIS.

    More about this item

    JEL classification:

    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • D2 - Microeconomics - - Production and Organizations

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