2002 World Congress of Environmental and Resource Economists

This paper examines socioeconomic objectives of forest conservation in wood producing countries. The paper develops a two-stage model of international forest industry. First stage entails national timber market that is modeled as a bargaining process between local forest owners and a firm that produces refined wood products. At the second stage the firm competes with an outside firm in a third country export markets on the basis of capacity constrained price competition. The model also allows for timber importation. Hence, timber imports become a feasible outside option for firms, and thereby diminishes the importance of domestic timber inputs as a commitment device to sustain higher prices in export markets. The paper demonstrates that as opposed to closed input markets, the existence of timber imports: (1) induces tougher competition in international markets for final goods; (2) reduces forest owners' timber revenues; and (3) diminishes governments' incentives to dump forest conservation requirements for trade policy purposes.



	Paper Title:	Timber Importing Versus Bargaining And Optimal Forest Conservation
	Presenting Author:	Ville Malkonen (UC Berkeley)
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	Abstract:	This paper examines socioeconomic objectives of forest conservation in wood producing countries. The paper develops a two-stage model of international forest industry. First stage entails national timber market that is modeled as a bargaining process between local forest owners and a firm that produces refined wood products. At the second stage the firm competes with an outside firm in a third country export markets on the basis of capacity constrained price competition. The model also allows for timber importation. Hence, timber imports become a feasible outside option for firms, and thereby diminishes the importance of domestic timber inputs as a commitment device to sustain higher prices in export markets. The paper demonstrates that as opposed to closed input markets, the existence of timber imports: (1) induces tougher competition in international markets for final goods; (2) reduces forest owners' timber revenues; and (3) diminishes governments' incentives to dump forest conservation requirements for trade policy purposes.
	Link to paper:	http://weber.ucsd.edu/~carsonvs/papers/866.pdf

	Session / Day / Time	1C / Monday / 8:00 - 10:00 am

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