Modeling of oligopolistic markets: the case of wood for floors. Spain 1994-2012

Abstract

The key economic indicators of the wood flooring industry show a reduced (four) number of competitors, a high degree of industrial concentration among the main companies and significant barriers, which effectively block the entry of new manufacturers. This paper models the behavior of the four main producers (two of traditional parquet and two of floating pallet) and the consumers of three types of wooden floors describing a strategic panorama with different results depending on the type of soil (Basic oak, Select oak and Jatoba). The results of the demand analysis show that the price elasticities are relatively high, so that the producers run the risk of seriously reducing their market shares, if they raise their prices alone. In addition, consumers find it difficult to distinguish between the highly homogeneous goods of the two pallet producers and the two parquet producers. In relation to the offer analysis, the producers of oak set prices in the same sense, being the first producer a leader. On the other hand, in the Jatoba market there is a greater competence among the first three producers, due to the search for market share and make price changes in the opposite direction.