A Socio-Economic Analysis of French Public Timber Sales

Abstract

This socio-economic study aims to better understand the functioning and the evolution of timber sales held by the French public forest service. The auction system is the historical institution which has been used for timber sales in France for centuries. The recent trend to develop supply contracts through private agreements has a major impact on the French timber industry, which is criticized for its lack of competitiveness. It accurately raises questions about the timber price issue. Indeed, the auction system plays an important role in price setting. We refer to the auction theory literature to examine the features of French timber auctions: first-price sealed-bid sequential auctions of heterogeneous standing timber lots. In particular, we note that seller's reserve price is kept secret and that, contrary to the general assumption in auction theory, the seller indubitably lacks information about his own reservation value. Finally, the difficulty of defining a "fair market price" remains a central issue in public timber sales.

Material flow analysis of the forest-wood supply chain: A consequential approach for log export policies in France

“…Indeed, in this type of capital-intensive industry, stocks of roundwood and final products are minimized to avoid high additional storage costs. Due to the high heterogeneity in timber sales practices (private and public, contacts and auctions) and the significant rate of informal transactions and re-selling of roundwood, it is not feasible to get information on stocks on any scale (Marty and Preget, 2010). In this study we consider that a fiveyears average is the best compromise for reducing the bias while remaining representative of the situation over a relatively short period of time.…”

Time-based combinatorial auction for timber allocation and delivery coordination

“…When many potential buyers are involved, auction is an efficient and practical process to allocate goods to buyers according to market value. It has therefore been used for centuries (Marty and Préget, 2010), and generally in its simplest form (i.e., first-price sealed-bid auction, Brown et al, 2012), for the allocation of pure or mixed species forest stands to forest product companies. Although such market mechanisms, when used in conjunction with government control mechanisms, are instrumental to the creation of a sustainable forest management approach (Kant, 2010), these rather simple applications of the single unit first-price auction cannot directly address the multi-firm coordination problem of forest operations.…”