Market structure and economic performance of forest products industry in Ontario and Canada

Abstract

Market structure for three major groups of Ontario and Canadian forest products industry was examined over the years 1975–1980 and 1965–1980, respectively, in terms of domestic seller concentration ratios. The analysis indicated that forest industries in Ontario are more or less a homogeneous part of those in Canada. However, patterns of change in concentration over time in both jurisdictions are different. Lumber industry in Ontario as well as in Canada, though not very competitive, is certainly unconcentrated. The pulp and paper industry, on the other hand, is mildly oligopolistic in both jurisdictions. The relatively small veneer and plywood industry is mildly oligopolistic in Ontario, but strongly so in Canada. Profitability of forest industries in Canada is positively and significantly related to the proportion of output exported and to the degree of domestic seller concentration. This degree of concentration, in turn, seems to be largely determined by the presence of economies of scale.