Monopsony, Conjectural Equilibria, and the Swedish Roundwood Market

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Abstract:

Earlier attempts to explain the excess demand for roundwood in Sweden overlook the strong elements of price discrimination in this market, i.e., that buyers pay different sellers different prices for homogeneous roundwood. This paper explains the latter feature by a variation of the theory of price discrimination under monopsony. By combining this approach with elements from the theory of conjectural equilibrium--explaining why a firm may perceive quantity constraints in a market even when prices are flexible--the paper then provides a possible explanation of excess demand tendencies (rationing) in a market, like the Swedish roundwood market, where price discrimination prevails. Forest Sci. 29:439-449.

Keywords: Supply of roundwood; excess demand; price discrimination; quantity constraints

Document Type: Journal Article

Affiliations: Professor, Department of Forest Economics, College of Forestry, S-901 83 Umeå, Sweden

Publication date: September 1, 1983

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