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Substitution elasticities of the imported and domestically produced pulp and paper

수입펄프.종이와 국산펄프.종이의 대체탄력성

  • Kim, Se-Bin (Dept. of Forest & Environment Resources, Chungnam National University) ;
  • Kim, Dong-Jun (Dept. of Forest Science, Chungbuk National University)
  • Received : 2011.03.28
  • Accepted : 2011.06.20
  • Published : 2011.06.30

Abstract

Traditional international trade theory assumes that import goods and domestically produced goods of the same industry are equal in quality. However the substitutability of the two goods is imperfect. This article estimated the import functions of pulp and paper using econometric and vector autoregressive models, and calculated the elasticities of substitution between imported and domestically produced pulp and paper. The import of pulp is inelastic to import price and domestic price, and elastic to national income in econometric model. And it is inelastic to import price, domestic price and national income in vector autoregressive model. On the other hand, the import of paper is inelastic to domestic price, and elastic to import price and national income in econometric model. And it is inelastic to import price and domestic price, and elastic to national income in vector autoregressive model. The elasticity of substitution between imported and domestically produced pulp was positive, and the elasticity was respectively 0.42 and 0.20 in econometric and vector autoregressive models. This may be because of the high proportion of imports. On the other hand, the elasticity of substitution between imported and domestically produced paper was positive, and the elasticity was respectively 0.75 and 0.81 in econometric and vector autoregressive models. This may be because the quality of imported paper is different from that of domestically produced paper.

Keywords

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