During harvest season, the NFCF holds daily auctions at each of its regional offices.
The auction is a common-value sealed auction and is presided over by a senior employee of the regional office of the NFCF. At slightly after 4pm each day, the available quantities for auction of each grade are displayed on a whiteboard.
The efficiency of the auction as a price-setting mechanism in the value chain can be evaluated through daily auction data collected from the NFCF. Theoretically, if the price-setting mechanism is efficient then the variability in price should broadly reflect the variability in quantity supplied.
The NFCF imposes rules on transportation of matsutake that wholesalers who participate in the auction must abide by.
Some regional offices of the NFCF facilitate regional differentiation through labelling each individual mushroom with a tag denoting the region in which it was harvested.
In the vast majority of cases, forest management activities for privately-owned forests are undertaken by the NFCF's extension services (Koo pers.
Lastly, policing and enforcement costs are somewhat reduced through the legal contract between the NFCF and wholesalers.
The success of the KFS and NFCF in reducing transaction costs and facilitating trade in matsutake trade is arguably best measured by the longevity of commercialisation, which has been ongoing since the 1960s, and the relatively high revenue that harvesters continue to earn from matsutake.
For state-owned forests, the KFS completely finances forest management which is undertaken by the extension services of the NFCF. For privately-owned forests, the costs of forest management are heavily subsidised.