School of Agriculture, Food and Ecosystem Sciences - Theses

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Type: PhD thesis × Start date: 1980 × End date: 1999 × Author: Bigsby, Hugh ×

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    Interregional trade in sawntimber in Australia
    Bigsby, Hugh ( 1989)
    The purpose of this study has been to develop a modelling framework which incorporates the essential features of the sawntimber market in Australia and which is capable of being used to study both the interregional trade patterns within Australia and the impacts of various changes on the sector. This firstly involved the determination of demand and supply relationships for the market and secondly the development of a spatial equilibrium model of trade. The basic structure of sawntimber market was studied with the use of two different approaches. The first was an ad hoc, statistical model of the sawntimber market in Australia. The statistical model provided new results for price elasticity of sawntimber demand in Australia. Elasticity of demand for sawntimber was found to be -0.783, an improvement on previous studies which found no relationship between sawntimber demand and the price of sawntimber. It also provided new information on the structure of the sawntimber market in Australia and the substitution between imported and domestic supplies. In particular, the results showed that domestic and imported sawntimber do not compete on the basis of price in the Australian Market. The second approach was through a theoretical model of the production structure of the sawmilling industry using the translog cost function. The estimation of the cost function served two purposes, the first to provide a measure of the slope of the supply curve for the trade model, and the second to provide information about the production structure of the industry. Although .data problems ultimately prevented the use of the translog cost function in the spatial equilibrium model, it did provide new information on input substitution, technological change and scale economies in the sawmilling sector. In particular, the results found that most inputs are substitutes, there are diseconomies of scale, and that technological change has been capital and energy using, and labour saving. The second component of the study was the development of a spatial equilibrium model of the sawntimber sector. This was done with a non-linear programming framework and based on demand and supply elasticities provided by the statistical model. The result was a model which could be used to study the impacts of demand and supply changes. The model was used to study the impact of the forecast increase in log availability by the year 2000. An important result from the use of this model was to demonstrate that an 11.5 percent price decrease could cause the domestic market to absorb 60 percent of the sawntimber which the increased log availability could allow. To summarise, the research encompassed in this thesis has provided new information on the economic structure and performance of the sawntimber sector in Australia. It has also provided a basis for new research and applications of the results. In this study the results were applied to a spatial equilibrium trade model of the sector in Australia. This in turn has provided a new basis for policy analysis in forest industry, in particular issues involving trade and demand or supply shocks.