Substitution, technical change and returns to scale in British Columbian wood products industries

The size and quality of timber in British Columbia declined steadily through the 1960s and 1970s. This paper presents estimates of factor substitution, technical change and returns to scale for four British Columbian wood products industries – interior and coast sawmills and planing mills, shingle mills and plywood and veneer mills – using pooled cross-section time-series data, 1963–79. Estimates of capital stocks are not available for these industries, so estimates of capital services are computed from aggregate capital stock and energy consumption data. The estimated cost functions are well behaved and show that all the inputs (capital services, materials and labour) are substitutes. Thus, capital services and labour can be substituted for the increasingly scarce natural resource. The input demand functions slope down and are inelastic. Interior sawmills exhibit constant returns to scale while the other industries show increasing returns to scale. The technical change is capital services using, labour s...

[1]  W. Diewert.  Superlative Index Numbers and Consistency in Aggregation , 1978 .

[2]  A. Woodland.  Substitution of Structures, Equipment and Labor in Canadian Production , 1975 .

[3]  H. Tsurumi.  Nonlinear Two-Stage Least Squares Estimation of CES Production Functions Applied to the Canadian Manufacturing Industries, 1926-1939, 1946-1967 , 1970 .

[4]  Daniel McFadden,et al.  Estimation Techniques for the Elasticity of Substitution and Other Production Parameters , 1978 .

[5]  J. M. Griffin,et al.  An Intercountry Translog Model of Energy Substitution Responses , 1976 .

[6]  Dale W. Jorgenson,et al.  U.S. Energy Policy and Economic Growth, 1975-2000 , 1974 .

[7]  Ernst R. Berndt,et al.  Parametric Productivity Measurement and Choice Among Flexible Functional Forms , 1979, Journal of Political Economy.

[8]  M. Denny,et al.  The existence of a real value-added function in the Canadian manufacturing sector☆ , 1977 .

[9]  Dale W. Jorgenson,et al.  Relative Prices and Technical Change , 1983 .

[10]  D. Jorgenson,et al.  U.S. Productivity Growth by Industry, 1947–73 , 1980 .

[11]  F. Martinello.  Factor substitution, technical change, and returns to scale in Canadian forest industries , 1985 .

[12]  Richard B. Freeman,et al.  How Elastic is the Demand for Labor? , 1980 .

[13]  M. Denny,et al.  Homotheticity and Real Value-Added in Canadian Manufacturing , 1978 .

[14]  M. Fuss.  The demand for energy in Canadian manufacturing: An example of the estimation of production structures with many inputs , 1977 .

[15]  R. C. DeGroot,et al.  Biodeterioration and strength reductions in preservative treated aspen waferboard , 1985 .

[16]  Mordecai Kurz,et al.  TECHNOLOGY AND SCALE IN ELECTRICITY GENERATION , 1964 .

[17]  D. Hamermesh.  Econometric Studies of Labor Demand and Their Application to Policy Analysis , 1976 .

[18]  M. Denny,et al.  A representation of Canadian manufacturing technology , 1978 .

[19]  W. Diewert.  Hick's Aggregation Theorem and the Existence of a Real Value Added Function , 1978 .

[20]  E. Berndt,et al.  Technology, Prices, and the Derived Demand for Energy , 1975 .

[21]  Walter Diewert,et al.  Exact and superlative index numbers , 1976 .