Biblioteca Digital

Abstract This paper develops and empirically tests a model of asset ownership in the Mexican timber industry where the timber supply is owned in common by rural communities. A property rights approach based on the incomplete contract literature rationalizes a vertical integration decision at the community level. The basic argument is that uncertainties in production and forest resource management create contractual hazards between community suppliers of wood products and private buyers and that residual decisionmaking rights affect community development. The model conditions tendencies towards community-level control with measures of the local community productivity relative to private contractors. Original survey data from Mexico provides the basis for empirical testing. It is found that communities are more likely to integrate forward into timber processing activities with higher levels of human, social and resource capital endowments. JEL Classication: D23, L22, O17, Q23.