Browsing by Subject "price elasticity"

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  • Suuronen, Juulia (Helsingin yliopisto, 2021)
    Forests play a central role in climate change mitigation actions, and substitution, that is the use of wood products in place of fossil intensive materials, has been recognized as a potential way to avoid emissions. While there are studies estimating the substitution impact of products, i.e., the avoided emissions, there is a lack of studies integrating market perspectives into substitution estimation. To contribute to this research gap, this study explores the market assumptions of substitution through the theoretical lenses of value chains and microeconomic theory on demand. The objectives are to recognize powerful decision-makers in the value chains, to establish a better understanding for the current state of substitution in the markets, and to explore the determinants of demand of the wood-based products. To limit the scope of this study, the use of pulp-based products was examined in the cases of packaging and textile sectors. Semi-structured interviews with 14 experts were arranged to discuss their views on substitution and demand of the pulp-based products in the chosen sectors. Additionally, a Likert scale was filled at the end of each interview to supplement the interview answers and enable elasticity and cross-price elasticity analyses to examine substitution. The sample of respondents was chosen through the use of snowball sampling and a matrix to recognize potential interviewees. First, the findings of this study suggest that in both sectors, the decision-making power on materials is held by the operators at the end of the value chain whereas the forest sector is located at the beginning of the chain. Second, in both sectors, there is willingness to find more sustainable material solutions, but the tools for this are lacking. In the case of packaging sector, the barrier capacities of plastic are unattainable with fiber-based materials, meaning that reducing plastic use does not always imply switching the feedstock itself. In the textile sector, the production of wood-based textile fibers is not yet scaled enough for it to compete with similar materials. However, the analysis of elasticities indicates that some substitution can be expected in both sectors. Third, a number of important determinants of demand were identified, yet no single factor could be identified as the most important one. This study concluded that there is room to improve the market assumptions for substitution impact estimation. In packages, the market preferences of fiber-based packaging in some uses give a rise for interpretational issues, while plastic reduction goals do not always imply switching to wood feedstock. In textiles, the new man-made cellulosic fibers (MMCFs) are expected to mostly substitute for viscose and fill the cellulosic gap from stagnating production of cotton instead of substituting for synthetic fibers. To conclude, it is central to integrate market data and concepts better into future substitution impact analyses to facilitate more realistic estimates.
  • Kyllönen, Juhapekka (Helsingfors universitet, 2010)
    The European Union has stated the reduction of carbon dioxide emissions as one of the major goals in its energy policy. The Emission trading system that started in year 2005 was established to create an efficient market for emission permits and to direct the emission reductions to areas where they are most cost-efficient. Finland has committed to follow the guidelines of the emission trading system and to make notable reductions to the total level of CO2 emissions. The goal of this study is to examine how the emission trading system has affected the fuel choices in the energy sector. The purpose is to find out whether there has been substitution between the different fuel types. The substitution effects were estimated by three different methods. Also this study tries to explain what type of price elasticities the different fuels have. Additionally the effect of emission permit on the allocation of different fuels is studied. The data used in this study were gathered from 67 plants over four years. The studied fuels were aggregated into three categories: wood, peat and other fuels the fourth studied variable was the price of emission permit. The data were edited in to a panel form and were analysed in statistical program EViews. Translog function form was used to solve the elasticities for different fuel types. The results indicate that during the observation period peat acted as a base load fuel with wood and other fuels acting as peaking fuels. Peat counted for half of the total fuel consumption with wood and the other fuels both having a share of about 25%. Wood and other fuels were more price sensitive and had a higher price elasticity than peat. The increase in the price of emission permits decreased the use of peat but had only minor effect on wood and other fuels. During the first period of emission trading system the fluctuation of the permit’s price was intense and the increase in the price did not have a major effect on the fuel choices in the Finnish energy sector. The second period started in 2008 and only one year of that period was included in this study, so it is still to yearly to make any further interpretations of how the second period has effected on the fuel choices. For future studies, in the field of interfuel substitution and price elasticity, a longer time period and a data set with more plants and more fuel types could offer more accurate results and would give more insight to how the plants react to the changing conditions.
  • Suihkonen, Lauri (Helsingfors universitet, 2009)
    Finnish round wood industry is reliable on Finnish nonindustrial private forest owners (NIPF) wood sales. More than half of the raw material that Finnish round wood industry uses comes from NIPF’s. Therefore, it is important for the Finnish round wood industry and for the whole economy to know the issues that have an effect on NIPF’s wood supply. This paper examines the supply of round wood in Finland using the theoretical approach of Fisherian consumption-saving model. This research examines the price elasticity of wood supply in Finland at regional level. To examine the regional markets Finland is divided to six price areas. The monthly price- and quantity data from year 1987 to 2007 is gathered from the Finnish forest research institute (METLA). This paper examines standing sale supply and delivery sale supply separately. The results show that usually price elasticity of wood supply is positive in both short-run and in long-run. The expected price variable’s effect on wood supply is negative. The results indicate that estimated short-run elasticities of supply are much greater than in earlier studies. This is because this research uses monthly data where as earlier studies have used quarterly or annual data. The estimated long-run elasticities of supply witch describe the reactions to economic trend are in the same magnitude with earlier studies. There were remarkable differences between standing sale models and delivery sale models. In the short-run delivery sale models price elasticities of supply were much smaller than in standing sale models. In the long-run the results were opposite. The results also show that there are remarkable differences between the supplies of round wood on different price areas. This result strengthens earlier research results on regional market differences in Finnish pulpwood supply.