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UBC Theses and Dissertations
Spatial pricing patterns and market power ; Theory and evidence from the BC interior pulp fibre market Nelson, Harry
Abstract
The large scale and transportation costs of most wood producing industries, especially in the pulp and paper sector, typically leads to high levels of concentration in regional markets for wood fibre. This in turn has meant that the possible exercise of market power in forest product input and output markets has been long recognized. A recurring issue i n British Columbia has been the prices paid by local pulp mills for wood chips used to produce pulp. The provincial government has directly and indirectly regulated the pulp fibre market in the Interior of the province both during its inception and throughout much of the past forty years. Government intervention led to a non-competitive outcome marked by l ow prices for wood chips that were characterized by the fact that prices paid to suppliers were invariant with respect to distance. A model shows how this particular equilibrium was inherently unstable, as evidenced by prices increasing four-fold after a change in firm behaviour. Because the province owns of most of the forest land in the province it has developed a set of goals concerning the provincial forest industry that include providing employment, maintaining community stability, and collecting revenues from the harvest of timber on behalf of the public. The provincial government faces a series of policy questions regarding the forest industry in terms of harvest levels, regulation, trade policy, and stumpage design. If past trends continue, pulp and paper mills are likely to become the largest users of the forest resource within the next five years, while provincial forest policy remains focused on the production o f solid wood products. At the same time, increased fibre costs due to a combination of government initiatives and decreasing fibre availability are affecting the entire forest industry in BC . For pulp and paper mills their fibre costs can determine their competitiveness i n world markets. How the government responds to these issues will affect both fibre flows within the sector as well as the future structure of the forest sector.
Item Metadata
Title |
Spatial pricing patterns and market power ; Theory and evidence from the BC interior pulp fibre market
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Creator | |
Publisher |
University of British Columbia
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Date Issued |
1999
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Description |
The large scale and transportation costs of most wood producing industries, especially in
the pulp and paper sector, typically leads to high levels of concentration in regional markets
for wood fibre. This in turn has meant that the possible exercise of market power in forest
product input and output markets has been long recognized. A recurring issue i n British
Columbia has been the prices paid by local pulp mills for wood chips used to produce pulp.
The provincial government has directly and indirectly regulated the pulp fibre market in the
Interior of the province both during its inception and throughout much of the past forty
years. Government intervention led to a non-competitive outcome marked by l ow prices for
wood chips that were characterized by the fact that prices paid to suppliers were invariant
with respect to distance. A model shows how this particular equilibrium was inherently
unstable, as evidenced by prices increasing four-fold after a change in firm behaviour.
Because the province owns of most of the forest land in the province it has developed a set
of goals concerning the provincial forest industry that include providing employment,
maintaining community stability, and collecting revenues from the harvest of timber on
behalf of the public. The provincial government faces a series of policy questions regarding
the forest industry in terms of harvest levels, regulation, trade policy, and stumpage
design. If past trends continue, pulp and paper mills are likely to become the largest users
of the forest resource within the next five years, while provincial forest policy remains
focused on the production o f solid wood products. At the same time, increased fibre costs
due to a combination of government initiatives and decreasing fibre availability are affecting
the entire forest industry in BC . For pulp and paper mills their fibre costs can determine
their competitiveness i n world markets. How the government responds to these issues will
affect both fibre flows within the sector as well as the future structure of the forest sector.
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Extent |
13266605 bytes
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Genre | |
Type | |
File Format |
application/pdf
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Language |
eng
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Date Available |
2009-07-03
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Provider |
Vancouver : University of British Columbia Library
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Rights |
For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use.
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DOI |
10.14288/1.0099421
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URI | |
Degree | |
Program | |
Affiliation | |
Degree Grantor |
University of British Columbia
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Graduation Date |
1999-11
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Campus | |
Scholarly Level |
Graduate
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Aggregated Source Repository |
DSpace
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Item Media
Item Citations and Data
Rights
For non-commercial purposes only, such as research, private study and education. Additional conditions apply, see Terms of Use https://open.library.ubc.ca/terms_of_use.