Economic Transition and Product Demand Pattern in China: Evidence from China's Paper and Paperboard Industry

Title: Economic Transition and Product Demand Pattern in China: Evidence from China's Paper and Paperboard Industry
Format: Journal Article
Publication Date: September 2006
Description:

In this study, we investigate the demand pattern and structural changes during the economic transformation using data from the paper and paperboard industry in China. Instrumental variable estimations as well as co-integration analysis and error correction models are applied to the analysis. Our results show that in the early stages of economic reform before 1993, the demand did not respond to price changes; while in the later stages, the demand shows significant responses to its own-price and the price of international markets. In particular, since 1992, the own and cross-price elasticity of demand for domestically made paper and paperboard products becomes, respectively, − 0.69 and 0.59, in the range found in some market economies. We also find that imports are substitutes for domestically made paper and paperboard products, but the reverse is not true; and in the later stage of economic transition, the reliance on international market has increased, as reflected by the lower price elasticity of imports.

Ivan Allen College Contributors:
External Contributors: Jifeng Luo
Citation:

Li, Haizheng, Jifeng Luo, and Patrick McCarthy. "Economic Transition and Demand Pattern: Evidence from China's Paper and Paperboard Industry." China Economic Review 17.3 (2006):  321-336.

Categories:
  • Applied Microeconomics
  • Economic Forecasting
  • Industry Studies
Related Links:
Related Departments:
  • School of Economics