Analysis of consumer demand for packaging suggests that: plastic packaging is a luxury good, while paper packaging is a normal good, paper packaging demand increases with the price of plastic packaging, and that demand for paper packaging is most sensitive to its own price, and to the income of consumers. In a complementary analysis of input demand in the converting paper industry it was found that the demand for each paper grade is price inelastic, capital and other materials are substitutes for paper, while labor is a complement, technical change rapidly decreases the use of unbleached kraft packaging and industrial converting, and increases the use of other grades. The demand for each paper grade, derived from the consumer demand and the factor demand functions, showed that, from 1983 to 1991, the demand for paper in packaging was influenced mainly by consumer income, and by the price of paper packaging, and less so by the price of paper itself, or by the price of plastic packaging.