Journal of Forest Economics > Vol 10 > Issue 3

Efficient timber pricing and purchasing behavior in forest owners’ associations

Ståle Størdal, , Stale.Stordal@ostforsk.no
 
Suggested Citation
Ståle Størdal (2004), "Efficient timber pricing and purchasing behavior in forest owners’ associations", Journal of Forest Economics: Vol. 10: No. 3, pp 135-147. http://dx.doi.org/10.1016/j.jfe.2004.07.003

Published: 02 Nov 2004
© 0 2004 Ståle Størdal
 
Subjects
 
Keywords
JEL Codes:D82L14Q13Q23
ContractsForest owners’ associationsIncentivesTimber markets
 

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In this article:
Introduction
Pricing schemes in FOAs
Concluding remarks

Abstract

In Norway, forest owners’ associations (FOAs) have increased their market share the past few years. Even though FOAs exploit economics of scale achieved through collaboration among small nonindustrial wood-lots, standard linear pricing as the timber purchasing strategy can turn out sub-optimal. In line with Vercammen et al. (Am. J. Agric. Economics 78 (1996) 572) a constrained efficient nonlinear pricing scheme for FOAs is derived. The forest owners are grouped in low and high cost types. Efficient nonlinear pricing gives the forest owners an extra unit payment for their increased supply, given that the FOAs break even. Inelastic supply, a large low cost type group, equality between types, and high fixed costs make standard linear pricing more efficient.

DOI:10.1016/j.jfe.2004.07.003