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Substitution and econometric analysis

It has been noted that substitution of all forms within the forest products markets of Asia Pacific will result in potentially large restructuring of both production and consumption, accompanied by various price impacts and economic incentives. Much of the analysis of these factors will revolve around a better understanding of the technical elasticity's of supply, demand, and cross-product substitution. Both technical and econometric efforts will be required to provide more timely, current and focused estimates of these dynamic factors based on comparative changes in relative prices between products as well as the evolution of alternative goods in meeting market requirements for changing end uses. Market segmentation, rather than commodity or product approaches, can potentially shed much light on the processes of substitution. It is Recommended that a study module be included in the proposed Outlook study dealing with substitution (technical and economic) and inclusive of quantitative estimation of relevant measures of elasticity specific to the Asia Pacific Region.

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