Decision Making of Forest Owners and Social Relationships : A View from Transaction Cost Economics

Abstract

We consider that forest owners make decisions under the influence of social relationships as well as the influence of economic factors. This paper demonstrated theoretically the relationship between the behavior of forest owners and their social relationships from the perspective of transaction cost economics. We proposed hypotheses which explain that social relationships between forest owners and forestry corporations and social relationships among forest owners themselves affect the forest owners' decisions about harvesting and silviculture. The validity of these hypotheses was tested with mail survey on members of the forestry cooperatives in Iwate Prefecture and Akita Prefecture. The results revealed that social relationships among forest owners themselves have a large influence on the forest owners' decisions. We discussed the existence of a background mechanism in which social relationships among forest owners themselves stimulate the circulation of reputations about forestry corporations and reduce the social uncertainty.