The effects on the short-run supply of wood from subsidized regeneration measures: an econometric analysis

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Abstract
Using an econometric model of the sawtimber and pulpwood market in price region 1 (the northern part of Sweden), it is considered whether the subsidies paid to regeneration costs in this region since the end of the 1960's have had any measurable short-run effect on wood supply. Two interrelated markets are introduced, a sawtimber market and a pulpwood market. The sawtimber market is modelled as a competitive market, while the pulpwood market is treated as a monopsonistic market structure. The model shows a good fit and the subsidies seem to have had a significant negative effect on sawtimber supply and an insignificant negative effect on pulpwood supply. The paper ends with a discussion of possible reasons for this somewhat unexpected result.

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