Canadian Forest Service Publications

Sawmill production in the interior of British Columbia: A stochastic ray frontier approach. 2010. Niquidet, K.; Nelson, H. Journal of Forest Economics 16(4): 257-267.

Year: 2010

Issued by: Pacific Forestry Centre

Catalog ID: 32131

Language: English

Availability: Not available through the CFS (click for more information).

Available from the Journal's Web site.
DOI: 10.1016/j.jfe.2010.04.001

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We examined the productive efficiency of the interior sawmilling industry in British Columbia using stochastic frontier analysis. Prior sawmilling studies using this method have neglected the multi-output nature of sawmills. To accommodate both lumber and chips as outputs, we used a ray production function and adopted it into the stochastic frontier framework. A translog functional form was specified with three inputs (i.e., capital, labour, and roundwood) and applied to five years (2003–2007) of mill specific production data. The ray production function is flexible allowing factor productivity to vary with the output mix. Results indicated the presence of both economies of scale and technical inefficiency. This suggested that a long-run equilibrium had not yet been reached during this time and might explain recent restructuring occurring in this region.