PRODUCER BEHAVIOR AND TECHNOLOGY IN THE PULP AND PAPER INDUSTRIES OF THE UNITED-STATES AND CANADA - A NONPARAMETRIC ANALYSIS

Nonparametric tests of fundamental economic assumptions were conducted for the pulp and paper industries of Canada and the United States. Th e method permitted the use of disaggregate data and avoided the imposi tion of a particular functional form. The validity of the following hy potheses was investigated: cost minimization, profit maximization, tec hnical change (Hicks-neutral or biased), and separability of inputs an d outputs. Both deterministic and stochastic tests were applied. The r esults suggested that cost minimization, or profit maximization in the presence of technical change, could be assumed for both countries, in the long run and the short run. Manifold separability tests suggested that high levels of aggregation for inputs and outputs were possible in modeling the industries of both countries, but that pulp production should be kept as a separate output for Canada. The hypothesis of Hic ks-neutral technical change could be accepted for Canada, but seemed q uestionable for the United States.