%0 Research article
%T Interdependence of the sawlog, pulpwood and sawmill chip markets: an oligopsony model with an application to Finland
%A Kallio, A. Maarit I.
%D 2001
%J Silva Fennica
%V 35
%N 2
%R doi:10.14214/sf.598
%U https://silvafennica.fi/article/598
%X The interdependence of the markets for pulpwood, sawlogs and sawmill  chips is analysed using a short-run model, which accommodates the  alternative competition structures of wood buyers. We propose that  imperfect competition in the pulpwood market tends to make the sawmills  owned by the pulp and paper companies larger than the independent ones,  even in the absence of transactional economies of integration. The  impact of the wood market competition pattern on the profits of the  forest owners and forest industry firms depends upon a firm-capacity  structure, wood supply elasticities, and business cycles in the output  markets. The numerical application of the model to the Finnish softwood  market suggests that inflexibility of production capacities tends to  make the wood demand rather insensitive with respect to price. Only the  large firms, which all produce both pulp and sawnwood, may have  oligopsony power under some conditions. Integrated production can  increase competition in the sawlog market via the wood chip market.