Production technology in the pulp and paper industry in the European Union: factor substitution, economies of scale, and technological change

摘要

The objective of this paper is to analyse the cost implications of several important features of the production technology in the pulp and paper industry in the member states of the European Union. A flexible industry cost function with three inputsis estimated for the EU with annual panel data for the period from 1970 to 1995. Substitution and price elasticities are estimated, together with technological biases. The results show significant but small substitutability between labour and both capital and wood, and complementarity between the latter. Evidence was found of important economies of scale in this industry. Technological change has been labour saving and capital using. Finally, important differences were found amongst the EU countries. InFinland, Portugal and Sweden, the three biggest EU producers and exporters of pulp, technological change has beery more labour saving, and both labour and cross wood substitution and price elasticities are higher than in the rest of the EU.