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Forest-mill integration: A transaction cost perspective

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  • Niquidet, Kurt
  • O'Kelly, Glen
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    Abstract

    In Canada, where public ownership of forestland is prevalent, a central decision facing policy makers is how to allocate timber resources to private forest companies. Debates tend to focus around what proportion of the annual harvest should be devoted to markets as opposed to long-term contracts. To give a guide to policy makers, we surveyed forest firms from New Zealand and Sweden where this decision is based purely on a commercial basis. On average, mills source fifty percent of their fibre from the market. However, using a fractional logit model, we test whether theories from transaction cost economics influence this decision. Results are consistent with transaction cost economics; firms decrease the proportion of fibre sourced from a market with increasing fibre specificity, capital intensity, forest ownership concentration and uncertainty.

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    Bibliographic Info

    Article provided by Elsevier in its journal Forest Policy and Economics.

    Volume (Year): 12 (2010)
    Issue (Month): 3 (March)
    Pages: 207-212

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    Handle: RePEc:eee:forpol:v:12:y:2010:i:3:p:207-212

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    Web page: http://www.elsevier.com/locate/forpol

    Related research

    Keywords: Transaction costs Forest tenure Vertical integration;

    References

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