Estimating the demand for poplar wood in the wood and paper industries of Iran

The sources of raw wood for industries in Iran are forest, imports, wood cultivation and garden waste. However, Restrictions on imports and bans on logging in forest areas in recent years have caused greater attention to wood cultivation and in particular to poplar cultivation. Despite the importance of poplar in wood and paper industries, no study has been conducted so far to explore country´s demand for poplar wood. Therefore, the main purpose of this study is to estimate the demand function of poplar wood of industries, for which poplar wood is one of the production inputs. The Translog and Sheffard Lemma cost function approach was used to estimate the demand function. The added value of wood and paper industries at a fixed price (production), price and amount of poplar wood consumption and other production inputs during 1992-2017 were used for estimation. The results showed that the demand for poplar wood is a function of its relative price, the relative price of other production inputs and the level of production. The results also showed that the price of poplar wood, imported wood, electricity, labor and production are influential on the demand. Moreover, cross-price elasticity sign showed that imported wood is alternative for poplar wood, while other inputs serve as supplements. Also, the demand for poplar wood is inelastic to its price as well as to price of other inputs.