PAPER OR PLASTIC - THE UNITED-STATES DEMAND FOR PAPER AND PAPERBOARD IN PACKAGING

Analysis of consumer demand for packaging suggests that: plastic packa ging is a luxury good, while paper packaging is a normal good, paper p ackaging demand increases with the price of plastic packaging, and tha t demand for paper packaging is most sensitive to its own price, and t o the income of consumers. In a complementary analysis of input demand in the converting paper industry it was found that the demand for eac h paper grade is price inelastic, capital and other materials are subs titutes for paper, while labor is a complement, technical change rapid ly decreases the use of unbleached kraft packaging and industrial conv erting, and increases the use of other grades. The demand for each pap er grade: derived from the consumer demand and the factor demand funct ions, showed that, from 1983 to 1991, the demand for paper in packagin g was influenced mainly by consumer income, and by the price of paper packaging, and less so by the price of paper itself, or by the price o f plastic packaging.