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Vertical price transmission in timber and lumber markets

Author

Zhuo Ning and Changyou Sun
Journal of Forest Economics, 2014, vol. 20, issue 1, pages 17-32
Abstract: Timber and lumber markets are linked and integrated through prices at several stages along timber supply chain. In this study, the degree of vertical integration and the presence of asymmetric price transmission are investigated for sawtimber and lumber products in the southern and western United States. The data utilized are quarterly stumpage price, delivered timber price, and lumber price of softwood between 1977 and 2011. Linear and threshold cointegration models are used for long-term price analyses, and symmetric and asymmetric error correction models are used for short-term price analyses. The integration in the early stage (i.e., stumpage/delivered timber price pair) is found to be stronger than that in the latter stage (i.e., delivered/lumber price pair). The South shows slightly stronger market cointegration than the West. Asymmetric price transmission is found along the timber supply chain. In the long term, prices are more responsive when the price margin is increased than decreased.

Keywords: Asymmetric price transmissionError correction modelMarket integrationThreshold cointegration (search for similar items in EconPapers)
JEL-codes: C32 F15 Q23 (search for similar items in EconPapers)
Date: 2014
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