Veneer supply and demand estimation using simultaneous equations model

Purpose – Veneer is one of the most important products in the wood‐based panel industry, therefore, to provide needed information for the development of this industry, it is necessary to provide better understanding of the forces driving the demand and supply of veneer. The purpose of this paper is to describe how supply and demand can be estimated by using a simultaneous equations model. Design/methodology/approach – A theoretical framework is proposed based on a systematic approach of iterative 3‐stage least squares (I3SLS). The reason for using simultaneous equations is the existence of reciprocal relations between economic variables in this research. Findings – Applying this theoretical framework is a useful tool to study the situation of veneer as one of the most important wood‐based panel products in Iran. For example, based on the results, it can be understood that veneer is a normal and essential commodity, and any increase in the price of veneer can lead to a considerable rise in total income for producers. To satisfy the excess demand, extensive investment is needed in establishing new plants. Research limitations/implications – There are many restrictions in applying other approaches, because of no access to research data. The present study provides a starting‐point for further research using other econometric models on different aspects of forest products marketing. Originality/value – The framework (econometric models especially simultaneous equations) has proven to be useful in studying and improving forest products marketing. The use of such procedures was new and this research was done for the first time in Iran.