Spatial production structure and input choices of forest products in Sweden

Abstract

A spatially analyse of the production structure and input choices for the heating, sawmill, and pulp sectors in Sweden is conducted using a panel data set includes quarterly data for period 2011 to 2016 across 21 counties. Focus is on price and input substitution elasticities, scale effects and technical change measures. A single-output regional translog cost models is developed and estimated. The translog specification is chosen for its flexibility and for the range of alternative hypotheses that can be tested. The results indicate relative elastic price elasticities, limited possibilities to exploit scale effects to future reduce the variable production costs, technical restriction in input substitution options, and mature production technologies that still need to be invested in to reduce technical deterioration over time. The results are usable for practitioners, policy and decision-makers as well as inputs in future academic modelling, especially when assessing the paths towards a biobased economy.