Modeling bilateral forest products trade.

Abstract

Abstract The focus in this chapter is on the development of mathematical programming models used to model bilateral forest products trade. Theoretical outlines are provided of a multi-region, single product trade model and of an integrated, multi-region, multi-product trade model. The objective function and constraints are described mathematically, while the analysis takes into account horizontal and vertical chains and the need to calibrate the model using observed trade flows. Data sources are discussed, and the GAMS code is provided for the uncalibrated and calibrated versions of the model. The Canada-U.S. softwood lumber dispute is the raison d'être for much applied work in modeling forest products trade, especially on Canada's side. In this chapter, we examine several spatial price equilibrium (SPE) trade models that are currently used to investigate the implications of trade barriers imposed on Canadian exports of softwood lumber to the United States. The reason we consider bilateral trade is so that we can determine the impacts of trade restrictions on various regions in North America. We begin in the next section by specifying a general but vertically integrated SPE trade model.