Estimation of Recycled Paper Demand Function in Iran: Cointegration Approach

Document Type : Research Paper

Authors

1 Faculty Member of Economics of Policy, Shahid Beheshti University

2 PhD in Forest Economics and Management, Faculty of Natural Resources, Lorestan University

3 Faculty of Humanities, University of Amsterdam. Netherlands

10.22111/ijbds.2025.52949.2274

Abstract

This study aims to estimate the demand function for recycled paper in the Iranian economy during the seasonal period of 2000 to 2021. The Johansen-Juselius cointegration method was used to identify the factors influencing demand in both the long and short term. Quarterly data were generated from annual figures using the Denton method, and the model was specified in a linear logarithmic form.
The model’s variables include per capita consumption of recycled paper, its price, the price of virgin paper, the percentage of internet users, and Gross Domestic Product (GDP). A dummy variable was also included to account for the removal of the import tariff in 2018. The results indicate that recycled paper is a necessary and inelastic good. In the long term, it becomes an inferior good, meaning that as income and welfare increase, consumers and producers shift towards higher-quality virgin paper.
In the short term, demand is influenced by changes in GDP, the price of recycled paper, and the internet. The price elasticity of demand is very low (0.012%), suggesting that price changes have a negligible impact on the quantity demanded. The error correction model (ECM) coefficient of -0.51 indicates that half of the short-term disequilibrium is corrected in each period.
These findings emphasize the importance of government policies in encouraging recycling and managing the market. Given Iran's limited forest resources, focusing on this sector can contribute to economic and environmental sustainability. Future research could explore the impact of tax and subsidy policies on the paper recycling industry.

Keywords

References

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International Journal of Business and Development Studies
Volume 17, Issue 2
October 2025
Pages 29-46

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