Substitution in the Finnish forest industry’s roundwood procurement
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.
Received 2 March 2012 Accepted 4 July 2012 Published 31 December 2012