ABSTRACT
There is a variety of related literature emanating from the large forest products producing countries of the region, in particular Canada, the United States, and Indonesia. This chapter discusses economic modelling in and on forestry in New Zealand. It serves as a review of the relevant domestic and overseas applied research on trade policy and processing issues. A number of spatial equilibrium models have been inspired by threatened United States tariffs on imports of Canadian softwood. A spatial equilibrium model with multiple products in multiple countries avoids the problem of being only able to consider limiting cases. The most well-known of the large-scale models built along spatial equilibrium lines with a global focus is the Global Trade Model (GTM). The assumption of fixed proportion technology common in spatial equilibrium models means that changes in wood-labour-capital costs have no effect on the optimal choice of production technique.
