Large investments in the pulp and paper industry: a count data regression analysis^*

This paper analyses the effects of price and market size variables on the investment propensities in the pulp and paper industry. A panel of 15 European countries in the time period 1988–1997 is used in the regression analysis.We find the wages, the USD/ECU exchange rate, the price of paper and the installed production capacity to be the main determinants of large investments in this industry. Our measure of market size has no – or only very small – effects.