In this econometric analysis, the Swedish roundwood market is divided into two submarkets: the sawtimber market, which consists of many buyers and sellers, and the pulpwood markets, which consists of few buyers who collaborate in purchasing cartels. The two markets are interrelated through cross-price effects. The main issue is to quantify the effects on social welfare if the pulpwood market were competitive. The results show that a competitive pulpwood market should bring about a shift in the market structure in the sense that the pulp industry would expand its capacity at the expense of the sawmill industry. Copyright 1989 by The editors of the Scandinavian Journal of Economics.
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