Measuring the competitiveness of Canadian pulp and paper in the US market reveals needs for more research

Abstract

This paper studies substitution between main categories of imported pulp and paper products and between imported and domestic pulp and paper products in the US market. A restricted translog subcost function approach was employed to derive the elasticity of substitution. The results suggest that Canadian pulp and paper products are competitive and have maintained their competitiveness in the US market, and therefore, the challenges faced by the Canadian pulp and paper industry are not because of the loss of its product competitiveness but are due to other reasons such as declining demand for paper products in the United States. It seems that if the Canadian pulp and paper industry wants to retain its dominant position in the world market place, it will have to create global reach and develop new markets.