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- Analysis of Supply and Demand for Lumber in Thailand
Analysis of Supply and Demand for Lumber in Thailand
Dissertation Abstract:
Disaggregate an aggregate models based on time series data were developed for the period from 1960 to 1975. Disaggregate models were employed to formulate demand, supply and price of teak lumber and aggregate models included all kinds of lumber. The regression coefficients of demand, supply and price function were estimated with the use of the two-stage least-squares method. Variables entering the mathematical model were determined, and all models obtained were tested for their validity. Elasticities of demand and supply of teak and of all kinds of lumber concerning the variables included in their models were estimated. Projection and policy analysis about demand, supply and price of lumber were also designed for a ten-year period, 1976 to 1985.
Results showed that the price elasticity of demand for teak lumber is more than unity (2.89) or relatively elastic, indicating that as the price increases, the demand would also increase more than proportionately, because other construct materials could not suitably substitute for teak lumber. On the other hand, the price elasticity of the supply of teak lumber was less than unity (0.92) or relatively inelastic, implying that as the price in the previous year increases, the increase in supply of lumber would be less than proportionate.
In the aggregate study, the price elasticity of demand for lumber was less than unity (-0.11) or relatively inelastic, which means that as the lumber price increases, the decrease in lumber demand is less than proportionate.
The elasticity of lumber supply was also less than unity (0.36) or relatively inelastic, indicating that as the previous year’s price increases, the increase in quantity of lumber supply would be less than proportionate.
In both disaggregate and aggregate studies, the rise in the price of teak lumber and of all kinds of lumber would increase revenue. This calls for policies that would increase lumber production and stabilize the price of lumber. The study showed that increasing the price increases the quantity of lumber produced for the market.
Projection analysis demonstrated that the rate of increase in demand for lumber will be higher than the rate of increase in supply, hence demand deficit will become larger over time. This suggests the need for an effective policy on lumber productivity development in order to overcome the lumber shortage problem.