The impact of technical change, scale effects, and forward ordering on u.S. fiber demands

This paper estimates a complete system of input cost shares in U.S. textile production, using time-series data and a linear logit specification incorporating the impact of technical change and scale effects on derived demands for natural and manmade fibers. The specification accounts for forward ordering dynamics in the textile industry. Technical change has decreased natural fiber use in U.S. textile mills in favor of manmade fibers. Decomposition analysis of economic factors affecting long-run use of natural versus manmade fiber indicates that nonprice factors account for 70% of the decline in long-run natural fiber use.