Competition of Imported Wooden Bedroom Furniture in the United States

The United States has been increasing the import of wooden bedroom furniture from the world to meet its domestic needs. Traditional suppliers have been substituted by developing countries such as China and Vietnam over the past decade. To explain this market structure change, a dynamic Almost Ideal Demand System (AIDS) was employed to analyze this import market. Monthly import data of the top seven countries from 2001 to 2008 were collected from the International Trade Commission. The Engle-Granger cointegration test showed that the cointegration relationships existed in this demand system. Both homogeneity and symmetry properties were not rejected in the dynamic AIDS. The superiorities of dynamic AIDS were also revealed in passing several misspecification tests. The U.S. antidumping investigation on China was effective in the short-run, but the trade diversion occurred from China to Vietnam, Indonesia, and Brazil. Finally, the expenditure elasticities suggested that U.S. consumers would spend more money on the wooden bedroom furniture from Vietnam, China, and Malaysia. All the own-price elasticities were significantly negative and the cross-price elasticities indicated the competition among those suppliers. The results from this study are helpful in understanding the competition among suppliers, the consumer behavior in this market, and the impact of antidumping policy.