Softwood lumber products in the United States: substitutes, complements, or unrelated?

This study addresses an important dimension concerning the softwood lumber trade dispute between United States and Canada¡substitutability among imported and domestically produced species. We employ the restricted translog subcost function approach to study this issue based on the monthly data of US softwood products consumption and prices between Jan. 1989 and July 2001. The results show that the spruce-pine-fir lumber species group, mainly imported from Canada, is largely unrelated to domestically produced treated southern yellow pine, Douglas-fir, and other species groups, but is a substitute to untreated southern yellow pine and engineered wood products. Furthermore, untreated southern yellow pine is facing more severe competition from structural panels rather than from the imported Canadian spruce-pine-fir group.