TRANSPORTATION SPECIFICATION IN FOREST TRADE MODELS

Computable spatial equilibrium models in the forestry literature are based on an analytic simplification of the transportation sector. This paper evaluates whether the usual transportation specification can cause biased economic estimates of trade policy actions implemented in forestry markets. The analysis reveals that estimates of tariff policy actions in fact can be sensitive to the transportation specification. This leads to some conclusions about the interpretation of economic estimates generated by spatial equilibrium forestry trade models.