The present investigation is concerned with the price elasticity of sawn wood, concentrating on the price elasticity of sawn wood supply for export. The supply of sawn wood for export is referred to the joint attitude to price changes of all producers participating in the market.
The study concludes that producers cannot in the short- and medium-term view use the price parameter to increase total utilization in the sawn wood market. Demand holds a primary position in price formation. The capacity reserve of the sawmills permits great variations in output at the mill level, and thus elasticity in the supply of sawn wood. High timber costs are typical for the industry. Supply of roundwood can easily be adapted even to large variations in demand. The price elasticity of roundwood supply is rather great.
The long process of sawn wood production and the resulting relatively long lead-time of deliveries result in a long adaptation time of supply. Expansion and contraction of sawn wood exports cause, via the effect of exports, on income similar fluctuations in the domestic sales of sawn wood. This weakens the price elasticity of exports in some degree.
The ‘instantaneous elasticity’ upwards of sawn wood supply might be great, but speculation with stocks at the different levels of production often makes it ‘incalculable’. The price elasticity of a medium-long and long period can be expected to be relatively great upwards. The downward elasticity of a period of medium length is probably small. The elasticity of a prolonged period may be influenced by the substitution of other materials for sawn wood.
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