Forest-based industrial network: Case of the French timber market

Abstract

Following the literature on automation, we model the industrial network of the forest-based sector, with random demands, in the presence of supply contracts. The economic network is composed of upstream, instream and downstream agents. Through the resolution of the variational inequality model, we investigate the network equilibrium flows and compute the prices at which the former can be attained. With respect to other results on optimal pricing of timber and wood products in France, the model outputs show that forest resources are overvalued, while manufactured products are undervalued. At last, we explicitly state the equilibrium conditions in case of vertical integration between the upstream and instream agents.