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Rent Capture Analysis of Ontario’s Stumpage System Using an Enhanced Parity Bounds Model

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  • Feng’ e Yang
  • Shashi Kant

Abstract

We develop and use an enhanced parity bounds model (EPBM) to examine the discrepancy between the stumpage price administratively determined under Ontario’s current stumpage pricing system and the market value of stumpage covering from June, 1995 to January, 2007. The results show that in the short run, the stumpage prices were below or above the market values. However, in the long run, the underpayment and overpayment will even out each other. The results imply that Ontario’s stumpage pricing system has the ability to capture the full economic rents in the long-run, and the results also have other policy implications.

Suggested Citation

  • Feng’ e Yang & Shashi Kant, 2008. "Rent Capture Analysis of Ontario’s Stumpage System Using an Enhanced Parity Bounds Model," Land Economics, University of Wisconsin Press, vol. 84(4), pages 667-688.
  • Handle: RePEc:uwp:landec:v:84:y:2008:i:4:p:667-688
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    References listed on IDEAS

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    1. Courtland L. Washburn & Clark S. Binkley, 1993. "Informational Efficiency of Markets for Stumpage: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(1), pages 239-242.
    2. Brannman, Lance Eric, 1996. "Potential Competition and Possible Collusion in Forest Service Timber Auctions," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 730-745, October.
    3. Yin, Runsheng & Baek, Jungho, 2004. "The US-Canada softwood lumber trade dispute: what we know and what we need to know," Forest Policy and Economics, Elsevier, vol. 6(2), pages 129-143, March.
    4. Stennes, Brad & Wilson, Bill, 2005. "An analysis of lumber trade restrictions in North America: application of a spatial equilibrium model," Forest Policy and Economics, Elsevier, vol. 7(3), pages 297-308, March.
    5. L. Ingber, 1996. "Statistical mechanics of nonlinear nonequilibrium financial markets: Applications to optimized trading," Lester Ingber Papers 96nf, Lester Ingber.
    6. Edward B. Barbier & Nancy Bockstael & Joanne C. Burgess & Ivar Strand, 1995. "The Linkages between the Timber Trade and Tropical Deforestation—Indonesia," The World Economy, Wiley Blackwell, vol. 18(3), pages 411-442, May.
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    More about this item

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q27 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Issues in International Trade

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