A Cost Analysis of the Lumber and Plywood Industries in Two Pacific Northwest Sub-regions

Translog cost models are used to represent production technologies for the Pacific Northwest lumber and plywood industries. Expressions for cost elasticities are obtained along with measures for derived demand, factor substitution, and biased technological change. Emphasis is placed on the behavior of costs over output, the derived demand and substitutability of inputs due to changes in factor prices and technology, and the resulting effects on product prices. Estimation results over the 1950–79 sample period suggest the presence of output economies in specific industries, a potential impact of reduced factor prices, and the lack of a consistent trend in technological change across products and regional industries.