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Are prices converging in the global sawnwood market?

Jose M. Gil, Antonio Montañés and Bernardo Vásquez-González

Forest Policy and Economics, 2023, vol. 155, issue C

Abstract: This paper aims at addressing if the increasing globalization in the international sawnwood markets has caused export prices to converge to a single reference price or, alternatively, certain restrictions remain to generate a segmented market where different reference prices for each market segment co-exist. Annual price series for the top-10 exporting countries are considered for that purpose. Results show that the data cannot support the null hypothesis of convergence. Instead, the global sawnwood market appears to be segmented into two convergence clubs (Chile-USA-Latvia-New Zealand and Canada-Germany-Austria-Finland-Sweden), while the Russian Federation exhibits an independent pathway. Causality tests are conducted to analyze the price dynamics in the global sawnwood products indicating that international price relationships are demand-driven. Finally, results suggest that the inclusion of a country in a particular convergence club is mainly determined by the price differential between countries (competition factors), and to a lesser extent, by the countries' combined market share in the global market (catching-up factors).

Keywords: Convergence; Law of one price; Phillips-Sul; Sawnwood prices (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1016/j.forpol.2023.102998

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