Wood market cartel in Finland 1997-2004: Analyzing price effects using the indicator approach

Drawing from the idea that income distribution is affected by imperfect market competition, this article examines the effect of a wood market cartel, where roundwood buyers illegally exchanged price information in Finland during 1997-2004. Prices before, during, and after the infringement period are examined using a comparator-based econometric approach with indicator variables in single-equation cointegrating models and in a seemingly unrelated regressions model. Using monthly data during 1996-2012, we investigate the prices of four softwood assortments, pine logs and pulpwood, and spruce logs and pulpwood, consisting of the majority of the industrial wood volume traded in the Finnish wood market. The results suggest that the price of pine pulpwood was statistically significantly affected and that the reduction in the price of pine pulpwood due to the infringement was on average about 10% over the 1997-2004 infringement period.

Automated summary

This article examines the impact of a wood market cartel in Finland from 1997 to 2004, finding that the price of pine pulpwood was significantly affected, with an average reduction of about 10% during the infringement period.