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Regional Log Market Integration in New Zealand

Kurt Niquidet and Bruce Manley

No 2008-03, Working Papers from University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group

Abstract: In this paper the integration of log prices across four regions in New Zealand was assessed. A time series of prices for six Radiata Pine (Pinus radiata D. Don) log grades in each of the regions were tested for co-integration using Johansen’s method and Engle-Granger pair wise tests. Prices for export grades display significant integration across regions and generally follow the law of one price. However, markets for domestic grades tend to be regionally segregated. These results are most likely due to the high costs of transporting logs between regions. Future modelling will need to incorporate such transportation costs in order to adequately characterise log markets in the country.

Keywords: log market; co-integration; law of one price (search for similar items in EconPapers)
JEL-codes: Q23 R32 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2008-03
New Economics Papers: this item is included in nep-geo
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