The significance of transport costs in the Swedish forest industry

Henrik Hammar, Tommy Lundgren () and Magnus Sjöström ()
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Magnus Sjöström: National Institute of Economic Research, Postal: National Institute of Economic Research, P.O. Box 3116, SE-103 62 Stockholm, Sweden

No 97, Working Papers from National Institute of Economic Research

Abstract: Environmental and transport policies based on marginal external costs, such as a kilometer tax for heavy goods vehicles, can be constrained by the risk of industries incurring higher production costs than competi-tors in other countries. However, the significance and size of this cost is largely an empirical question. We estimate factor demand elasticities in the wood and the pulp and paper industries using firm level data for the 1990-2001 period on input prices and quantities. The results show that the introduction of a kilometer tax for heavy goods vehicles affects transport demand as well as other factor demands and output, but that the ef-fects are less pronounced in terms of changes in output. In the wood industry, production decreases by be-tween 0.6 % and 3.0 %. The corresponding decrease in the pulp and paper industry is between 0.4 % and 1.3 %. The effects on average profits are small in both industries.

Keywords: elasticity; factor demand; kilometer tax; forest industry; transport policy; environmental policy (search for similar items in EconPapers)
JEL-codes: D20 H23 R48 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2006-12-01
New Economics Papers: this item is included in nep-env and nep-pbe
Note: Hammar, H. Lundgren, T. & Sjöström, M. (2008) “The significance of road transport costs in Swedish forest industry” is published in Journal of Transport Economics and Policy, 42(1): 83–104
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Citations: View citations in EconPapers (3)

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