[Matticus_Rex]

So you're suggesting what, exactly? It looks like you're making an emotional point based on some kind of national stake in resources. But it's not "our" timber -- it's the timber of some people who worked and invested in the capacity to cut it. If domestic timber prices are lower than foreign timber prices, making it harder for them to export timber just hurts the industry more. They're not sending it overseas to increase domestic timber prices; the domestic market has a glut, so foreign markets are willing to pay more -- that's how markets work, and interference in that process being bad for both domestic and foreign market participants is one of the few things most economists of all stripes are usually in consensus about.

[kokanator]

> They're not sending it overseas to increase domestic timber prices;

This is EXACTLY what they did. You missed the point.

They exported at a loss to drive up domestic prices.

[lhorie]

Not that I'm doubting you, I'm just trying to understand this claim. Can you explain the motivation behind exporting at a loss? If the argument is that there's too much timber supply driving down prices to the point that some of the inventory is sold at a loss, wouldn't it make more sense to just cut less trees?

[kokanator]

Say the market price of a tree had dropped to $1 from $5. If you can export a tree for -$1 and create a domestic shortage which causes a tree domestically to be worth +$4. You effectively double the value of a tree. ( hope the math is right just trying to make an example )

I am not sure why they didn't just cut less trees other than they probably had bids that would expire ( another policy problem ).

[Matticus_Rex]

Exporting at a loss is often the prudent financial measure just because of market conditions, and it does have the effect of increasing domestic prices (as a third-order effect), but the way you're describing it happening isn't plausible.

Do you have a citation that they're intentionally losing money in order to drive prices up to a target price? Because that, no offense, would be idiotic unless they have some kind of subsidization deal that would support it, as the export of any quantity of lumber even at break-even would not increase domestic prices enough to justify the losses of profit on that lumber if profit was available.

It sounds like the market is down, and they have lumber on hand, and it's better to sell at a loss and realize the revenue in most cases than to not sell at all.