The local lumbers, without restraints, are continually exploiting the Nigerian forests. This trend causes a massive reduction in the economic, recreational, water purification and other benefits derivable from the forest and forest products. The overall implication of this is that there is a shortfall in the market supply of wood and wood products in South Western Nigeria. This situation poses some challenges to the government, private operators and other stakeholders in timber industry. This study therefore, investigated the implications of the activities of the lumbers and the market equilibrium structure of wood industry in the region. Both the stochastic production frontier and market equilibrium analyses were done. Fuel, credit and trucks’ carrying capacities significantly determined the quantity of output of the lumbers. The estimates of the sigma square, d2 (0.3811) and gamma, g, (0.9001) were positively significant at 1% level. The log likelihood function was large (24.6672) indicating a good fit. Estimated demand elasticity indicated that N1.00 increase in market price produced 14.14 %, 52.73% and 55.12% decrease in the quantities demanded for 2x3x12, 3x4x12 and 2x6x12 wood sizes. To further increase the output level of wood products in the region therefore, it is necessary to stabilize fuel prices and make the product available to the lumbers at the required time and quantities.


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