Domestic timber auctions and flexibly specialized forestry in Japan

Abstract

In Japan, a well‐established, widespread system of local timber market auctions, featuring the exchange of privately owned logs, is increasingly threatened by imports organized according to mass production principles. This article assesses the evolution, rationale, and functions of Japan's timber auctions that were primarily created in post‐war Japan to provide key roles linking small‐scale (private) forest owners to flexibly specialized value chains that are consummated in Japanese homes. The conceptual point of departure for the analysis is flexible specialization theory's interpretation of industrialization as a contest between mass production and small‐scale production. We extend this discussion by giving analytical priority to markets as an institution distinct from firms and by interpreting markets from the perspectives of transaction costs and embeddedness, concepts normally deemed antagonistic to one another. Empirically, four case studies of timber auctions located in central and southern Japan are analyzed based on personal interviews with auction managers and participants within the context of broader trends in forestry. Three auctions feature ‘silent’ bidding and one involves open bidding. While the auctions exhibit varying characteristics, they continue to be the fulcrum of localized forestry systems, even as they are threatened by declining prices driven by imported wood and by restructurings within the Japanese solid wood sector. The continued resiliency of the flexible specialization model, and the auctions that are at its core, has important implications for forestry throughout Japan.