Canadian Forest Service Publications

Silvicultural contracting in British Columbia: A transaction cost economics analysis. 1999. Wang, S.; van Kooten, G.C. Forest Science 45(2): 272-279.

Year: 1999

Available from: Pacific Forestry Centre

Catalog ID: 5224

Language: English

CFS Availability: Order paper copy (free)

Abstract

In the light of institutional reforms to British Columbia's forestry sector, this study investigates forest companies' decisions to contract out silvicultural activities or to perform them in-house. A model is developed to test the relationship between a firm's choice of contractual forms and (a) the attributes of the activity (e.g., specificity of technical skills and physical assets, frequency of operations, and uncertainty in controlling performance quality) and (b) characteristics of the firm (e.g., company size). Data from a survey of forest companies in the Province are used to test several hypotheses. The empirical results confirm the transaction cost logic that silvicultural activities performed in-house are likely those that are complex to manage, how a low degree of seasonality, require high levels of human skills, and involve highly specialized physical assets.