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Forest-based industrial network: Case of the French timber market

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  • Dragicevic, Arnaud Z.
  • Barkaoui, Ahmed

Abstract

Following the literature on automation, we model the industrial network of the forest-based sector, with random demands, in the presence of supply contracts. The economic network is composed of upstream, instream and downstream agents. Through the resolution of the variational inequality model, we investigate the network equilibrium flows and compute the prices at which the former can be attained. With respect to other results on optimal pricing of timber and wood products in France, the model outputs show that forest resources are overvalued, while manufactured products are undervalued. At last, we explicitly state the equilibrium conditions in case of vertical integration between the upstream and instream agents.

Suggested Citation

  • Dragicevic, Arnaud Z. & Barkaoui, Ahmed, 2017. "Forest-based industrial network: Case of the French timber market," Forest Policy and Economics, Elsevier, vol. 75(C), pages 23-33.
    • Handle: RePEc:eee:forpol:v:75:y:2017:i:c:p:23-33
    DOI: 10.1016/j.forpol.2016.11.013
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    References listed on IDEAS

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    1. Oliver E. Williamson, 2005. "The Economics of Governance," American Economic Review, American Economic Association, vol. 95(2), pages 1-18, May.
    2. Joseph J. Spengler, 1950. "Vertical Integration and Antitrust Policy," Journal of Political Economy, University of Chicago Press, vol. 58(4), pages 347-347.
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    4. Barkaoui, Ahmed & Dragicevic, Arnaud Z., 2016. "Nash bargaining and renegotiation with social preferences: case of the roundwood log supply contracts in the French timber market," Forest Policy and Economics, Elsevier, vol. 69(C), pages 90-100.
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    More about this item

    Keywords

    Operational research; Network economics; Variational inequality; Supply chain; Forest-based sector;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L73 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Forest Products

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