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Changes in Industry Structure and Concentration?: Welfare Loss due to Perfect Competition in the Swedish Industry for Wooden Single-Family Houses
ATEA Logistics. (Industriell ekonomi ; Industrial Engineering)
Linnaeus University, Faculty of Technology, Department of Mechanical Engineering. (Industriell ekonomi ; Industrial Engineering)
Linnaeus University, Faculty of Technology, Department of Forestry and Wood Technology. (Industriell ekonomi ; Industrial Engineering)
2016 (English)In: 70th Forest Products Society annual convention - new horizons for the forest products industry, June 27-29, 2016, Portland, Madison: Forest Products Society, 2016Conference paper, Published paper (Refereed)
Abstract [en]

As studies based on data from 2012 show, the Swedish market for wooden single-family houses is highly competitive, with many firms offering relatively homogeneous products or services. In order to serve the demand on that market, only 38 % of the existing firms actually were needed. Thus, an uneven distribution of resource utilization let to welfare losses. Yet since 2012, the demand on the market increased by more than 35 %, which potentially had an effect on resource utilization.

This study is aiming at describing the development of the structure and concentration in the Swedish industry for wooden single-family houses, for a five year period from 2010 to 2014. This could help to understand, if and how market demand affects structure, concentration rate and consequently welfare loss due to resource utilization. The required data were collected from the annual reports of the 52 relevant firms in the industry. By means of the Herfindahl-Hirschman Index and the Herfindahl-Hershamann Number Equivalent, industry structure and concentration rate was calculated.

The results will show how the industry structure and concentration rate developed from 2010 to 2015, the distribution of resource for welfare purposes and thus, how many firms there actually were needed to serve the market.

Place, publisher, year, edition, pages
Madison: Forest Products Society, 2016.
Keyword [en]
Wooden single-family houses, Industry structure, Industry concentration, Industry analysis, Welfare loss
National Category
Production Engineering, Human Work Science and Ergonomics
Research subject
Technology (byts ev till Engineering), Industrial economy; Technology (byts ev till Engineering), Civil engineering; Technology (byts ev till Engineering), Forestry and Wood Technology
Identifiers
URN: urn:nbn:se:lnu:diva-51326OAI: oai:DiVA.org:lnu-51326DiVA: diva2:914512
Conference
70th Forest Products Society annual convention - new horizons for the forest products industry, June 27-29, 2016, Portland
Available from: 2016-03-24 Created: 2016-03-24 Last updated: 2017-02-17Bibliographically approved
In thesis
1. Market structure and economic status for firms producing single-family houses in Sweden
Open this publication in new window or tab >>Market structure and economic status for firms producing single-family houses in Sweden
2016 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

The gradually changing behavior of the population, towards urbanization, ledto an increased shortage of available housing. This development has resultedin a serious issue in Sweden, where too few firms are providing solutions formulti-family houses in wood. Potential firms that could fill this increasingdemand are those in the single-family house industry. Yet, these firms mightface considerable problems with productivity, predominately derived fromincreasing production costs and inadequate production development.Developing these firms are associated with long-term investments, whichis investigated by evaluating the industry structure for sellers, highlightingthe financial and market situation within their industry. These factors aregrowing in importance due to the current market concentration, where morefirms are required to focus on product development driven by the demand toprefabricate wooden elements, volumes or modules in an industrialized way.This thesis studies Swedish firms producing wooden single-familyhouses, with the aim to investigate their possibilities to enter the woodenmulti-family house industry in Sweden.Investigations will be conducted by applying Altman’s Z’ value, riskposition model, the Herfindahl-Hirschman index, the Herfindahl-Hirschmannumber equivalent, productivity ratio model for profitability and finally amodel measuring market Concentration Ratio.Results show that the industry tends towards perfect competition with toomany firms involved, i.e. firms mainly have to compete by prices. Further,firms are grouped into three zones; risk, grey or safe zone. The levels withinthese zone show a reduction of firms in the red zone over time. Related to thecurrent risks, many firms have promising positions to invest in productdevelopment towards wooden multi-family houses, in addition to theircurrent products, even though firm productivity has declined during thestudied time frame. The results that the investigated firms have goodpossibilities gaining a competitive advantage by diversifying into thegrowing wooden multi-family house industry.

Place, publisher, year, edition, pages
Växjö: Linnaeus University, 2016. 122 p.
Series
Faculty of Technology : Report, 47
Keyword
Wooden Houses, Wooden single-family houses, Wooden multi- family houses, Financial Performance, Risk Position, Economic distress, Z- score model, Industry Structure, Productivity, Off-site construction, Industry concentration
National Category
Mechanical Engineering
Research subject
Technology (byts ev till Engineering), Mechanical Engineering
Identifiers
urn:nbn:se:lnu:diva-60000 (URN)978-91-88357-52-6 (ISBN)
Available from: 2017-02-17 Created: 2017-01-20 Last updated: 2017-02-17Bibliographically approved

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Citation style
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