Integration of roundwood markets in Austria, Finland and Sweden

The study presents empirical testing of the law of one price (LOP) on the spatial roundwood markets formed by Austria, Finland and Sweden. Using annual delivery prices of pine and spruce sawlogs and pulpwood from 1980 to 1997, high positive correlation was found between prices in the three countries, in particular for pulpwood prices. The LOP seems to hold between Finnish and Swedish roundwood markets. However, clear price co-movement between Austria and the two Nordic countries could not be detected. Overall, the results suggest that roundwood markets in northern Europe form, roughly speaking, single commodity markets, which is one of the European Unionʹs main policy aims. Further integration of the markets can be expected due to the continuous globalization of the forest industry and the deepening economic integration of the EU.