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Assessing market power in the U.S. pulp and paper industry

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  • Silva, Bruno Kanieski
  • Cubbage, Frederick W.
  • Gonzalez, Ronalds
  • Abt, Robert C.

Abstract

This paper assesses the market power of pulpwood mills in different regions of the U.S. We estimated the conjectural elasticity, elasticities of substitution and price elasticities for the delivered price at the mill in Southeast and North U.S. and the stumpage in the Southeast. We assembled data composed of price and quantity of Labor, Energy, Chemical Products and Wood at firms' level from Q4/2016 to Q4/2017, and applied a variety of econometric models that measure the influence of firms and resource characteristics on market competition. The results indicate moderate levels of oligopsony power in all markets, with the highest effect at the mill in the North, and lowest in the stumpage market in the South. Market power in the pulpwood market is strongly driven by industry concentration and local company size, and decreases as the estimated wood procurement radius from a mill increases in size.

Suggested Citation

  • Silva, Bruno Kanieski & Cubbage, Frederick W. & Gonzalez, Ronalds & Abt, Robert C., 2019. "Assessing market power in the U.S. pulp and paper industry," Forest Policy and Economics, Elsevier, vol. 102(C), pages 138-150.
    • Handle: RePEc:eee:forpol:v:102:y:2019:i:c:p:138-150
    DOI: 10.1016/j.forpol.2019.03.009
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    References listed on IDEAS

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    Cited by:

    1. Kanieski da Silva, Bruno & Tanger, Shaun & Marufuzzaman, Mohammad & Cubbage, Frederick, 2022. "Perfect assumptions in an imperfect world: Managing timberland in an oligopoly market," Forest Policy and Economics, Elsevier, vol. 137(C).
    2. Mei, Bin, 2019. "Timberland investments in the United States: A review and prospects," Forest Policy and Economics, Elsevier, vol. 109(C).
    3. Koppenberg, Maximilian & Hirsch, Stefan, 2020. "Comparing methods for markup estimation with an application to EU food retailing," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304272, Agricultural and Applied Economics Association.
    4. Maximilian Koppenberg & Stefan Hirsch, 2022. "Markup estimation: A comparison of contemporary methods at the example of European food retailers," Agribusiness, John Wiley & Sons, Ltd., vol. 38(1), pages 108-133, January.
    5. Casey Olechnowicz & Jessica Leahy & Tian Guo & Emily Silver Huff & Cecilia Danks & Maura Adams, 2021. "Industry Leaders’ Perceptions of Residential Wood Pellet Technology Diffusion in the Northeastern U.S," Sustainability, MDPI, vol. 13(8), pages 1-15, April.
    6. Mydland, Ørjan & Størdal, Ståle & Kumbhakar, Subal C. & Lien, Gudbrand, 2022. "Modeling markups and its determinants: The case of Norwegian industries and regions," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 252-262.
    7. Jolley, G. Jason & Khalaf, Christelle & Michaud, Gilbert L. & Belleville, Douglas, 2020. "The economic contribution of logging, forestry, pulp & paper mills, and paper products: A 50-state analysis," Forest Policy and Economics, Elsevier, vol. 115(C).

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