2019 journal article

Assessing market power in the US pulp and paper industry

FOREST POLICY AND ECONOMICS, 102, 138–150.

By: B. Silva n, F. Cubbage n , R. Gonzalez n  & R. Abt n

co-author countries: United States of America πŸ‡ΊπŸ‡Έ
author keywords: Conjectural elasticities; Pulpwood market; Southern US; Market power
Source: Web Of Science
Added: April 15, 2019

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.