Decomposition of the cost growth for the US forest product industries

This article investigates sources that lead to the cost growth of eight U.S. forest products industries during the period 1997 to 2005. The cost growth rate decomposes into two components: the cost efficiency change and the cost technical change. Empirical evidences indicate that the cost growth in wood product industries is predominantly from cost technical change. In contrast, cost inefficiency primarily drives the cost growth in the pulp and paper industries.