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Full Length Research Paper
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Does legislation cause externalities in timber selling? A
case from Turkish timber market
Yusuf Güneş1 and Kenan Ok2*
1Istanbul
University, Faculty of Forestry, Department of Environmental
and Forest Law, Bahcekoy, Istanbul, Turkey.
2Istanbul
University, Faculty of Forestry, Department of Forest
Economics, Bahcekoy, Istanbul, Turkey.
*Corresponding author. E-mail:
kenanok@istanbul.edu.tr.
Accepted 3 June, 2010 |
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Abstract |
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This study aims to explain how legislation causes market
failure by creating problems of externality in forest
management in Turkey. In general, legislation is protective
and regulatory, but in some cases it could be used in
contradictory ways. This study investigates only timber
sales to forest villagers and related subsidies concerning
market failures and externalities. Subsidized timber sales
to forest villagers cause an unfair competition for forest
industries. This creates externalities arguable for State
and different stakeholders as negative or positive. As an
introduction, general overview of market failure,
externality and timber sales are summarized. Then, general
characteristics of Turkish forestry and the legal reasons
for subsidies were explained. Following that, structural
differences between Turkish timber market and stochastic
free market were summarized and illustrated. After that
materials and methodology of the research were explained.
Then, this study was completed by giving results, detailed
discussions and conclusions. Depending on computational
assumptions, total economic loss in timber sales to forest
villagers was computed about 100 million USD annually. This
amounts to approximately ten percent of the total economic
value as computed by Turker et al. (2005) which is not
negligible. Market structure in timber sales cannot be
defined by considering only free market assumptions.
Legislation should always be considered by forest managers.
The outcomes of this analysis showed that externalities
coexisted with legislative provisions.
Key words:
Externality, legislation, market failure, timber sales,
forest management. |
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