Lauri Hetemäki. (1990). Factor substitution in the Finnish pulp and paper industry. Acta Forestalia Fennica no. 211 article id 7658. https://doi.org/10.14214/aff.7658

Keywords: time series; cointegration; pulp and paper industry; factor demand; cost function

Abstract | View details | Full text in PDF | Author Info

The study examines the factor demands of the Finnish pulp and paper industry. In the theoretical part of the study, factor demand equations are derived using neoclassical production theory. In the empirical part, econometric factor demand model is estimated using annual time-series data for the period 1960–86. The relationship of factor demands and their prices are examined in terms of own price, cross price and substitution elasticities.

It is assumed that the ”representative firm” in the pulp and paper industry is minimizing its costs of production at a given output level. In addition, a number of other assumptions are made which enable the production technology to be represented by a cost function, in which the inputs are capital, labour, energy and raw materials. From the cost function, the factor demand equations, i.e., the cost share equations are derived by applying Shephard’s lemma. The equations are transformed to estimable form using translog approximation for the underlying factor share functions.

The study differs from the previous factor demand studies by applying the error correction model based on the Granger Representation Theorem and the results of the cointegration literature to model the dynamics of the factor demand. This approach provides a statistically consistent method for estimating the long-run static factor demand equations and the corresponding short-run equations. In general, the econometrics of integrated processes (e.g. stationarity and cointegration tests) applied in the present study have not been applied before in factor demand systems models.

The empirical results of the study indicate that the error correction approach can be applied to estimations of the factor demands for the pulp and paper industry. In both industry sectors, the adjustment to short run disequlibrium (price shocks) appears to be fairly rapid. The most significant results of the calculated elasticities are that the factor demands of pulp and paper industries clearly react to changes in factor prices and that there are significant substitution possibilities between the different inputs. The absolute values of the elasticities are, on average, somewhat larger than have been obtained in previous studies.

The PDF includes a summary in Finnish.

Hetemäki, E-mail: lh@mm.unknown

Category : Research article

article id 51, category Research article

Sanna Hautamäki, Antti Mutanen, Jari Viitanen. (2012). Substitution in the Finnish forest industry’s roundwood procurement. Silva Fennica vol. 46 no. 3 article id 51. https://doi.org/10.14214/sf.51

Keywords: roundwood procurement; imports; substitution; translog cost function

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In this study, the interaction and substitution between domestic and imported roundwood in the Finnish forest industry’s wood procurement is analysed by timber assortments. The results from the translog cost function approach and quarterly data of the total wood procurement and its components during the euro regime indicate that, to a certain extent, the Finnish forest industry has had the possibility of substituting imported roundwood volumes between countries in the Baltic Sea region. Contrary to earlier studies, also in the case of Russian birch pulpwood, the most important imported timber assortment, the results suggest that Russian birch pulpwood has rather substituted for than complemented the domestic supply in Finland. The increase in roundwood export duties in Russia has had a statistically significant effect on the trade in birch pulpwood and spruce sawlogs. Moreover, the results confirm the earlier findings of a rigid demand for roundwood in Finnish roundwood markets.

Hautamäki, Finnish Forest Research Institute, Joensuu Unit, P.O. Box 68, FI-80101 Joensuu, Finland E-mail: sh@nn.fi
Mutanen, Finnish Forest Research Institute, Joensuu Unit, P.O. Box 68, FI-80101 Joensuu, Finland E-mail: antti.mutanen@metla.fi
Viitanen, Finnish Forest Research Institute, Joensuu Unit, P.O. Box 68, FI-80101 Joensuu, Finland E-mail: jv@nn.fi

article id 142, category Research article

Helmer Belbo. (2010). Comparison of two working methods for small tree harvesting with a multi tree felling head mounted on farm tractor. Silva Fennica vol. 44 no. 3 article id 142. https://doi.org/10.14214/sf.142

Keywords: Norway spruce; cost functions; forest biomass harvesting; multi-tree handling; young stands

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In this study, the efficiency of a small multi-tree felling head, mounted on a farm tractor with a timber trailer was studied, when harvesting small trees for energy in thinnings. Both separate loading and direct loading of the felled trees was studied. Time studies were carried out in a mixed stand of Norway spruce (Picea abies (L.) Karst) and birch (Betula pubescens Ehrh.). The time consumption of the work elements in the different work methods was formulated by regression analysis, where the independent variables were tree size and degree of accumulation. The average size of the harvested trees was 0.035 m3. The time consumption for the harvesting and loading were similar for the two studied methods, 20 minutes per m3 at a tree size of 0.035 m3, but the two methods showed different characteristics for different tree sizes and level of accumulation. The direct loading method had the highest productivity when more than 0.1 m3 were collected in the felling cycle, whereas the separate loading method had the highest productivity when less than 0.05 m3 were collected in the felling cycle. The total effective time consumption for harvesting and forwarding the biomass 300 meters to roadside landing was 27 minutes per m3. The efficiency of the initial felling and collecting of the small trees was the main challenge. Both the harvesting technique and harvesting technology needs further development to provide a feasible production chain for woodfuel from energy thinning.

Belbo, Norwegian Forest and Landscape Institute, Box 115, 1431 Ås, Norway E-mail: helmer.belbo@skogoglandskap.no

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