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Criteria for Determining the Optimum Replacement Pattern

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  • Anthony H. Chisholm

Abstract

This article is an attempt to clarify some confusion that has been apparent in the literature of agricultural economics in recent years with respect to providing a criterion for determining the optimum replacement pattern for long-lived assets. In particular, for appreciating assets of the type represented by growing timber, the previous criteria have generally overlooked an important item of marginal cost: namely, the interest on the total revenue obtainable from the sale of the asset. These criteria have hence provided a replacement pattern which is longer than the the optimum.

Suggested Citation

  • Anthony H. Chisholm, 1966. "Criteria for Determining the Optimum Replacement Pattern," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(1), pages 107-112.
    • Handle: RePEc:oup:ajagec:v:48:y:1966:i:1:p:107-112.
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    File URL: http://hdl.handle.net/10.2307/1236182
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    Citations

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    Cited by:

    1. Batterham, Robert L. & Fraser, K.I., 1995. "Capital Equipment Replacement Decisions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(01), pages 1-8, April.
    2. Brake, John R. & Melichar, Emanuel, 1977. "Agricultural Finance and Capital Markets," A Survey of Agricultural Economics Literature, Volume 1: Traditional Fields of Agricultural Economics 1940s to 1970s,, Agricultural and Applied Economics Association.
    3. Webber, C. A. & Graham, J. D. & MacGregor, R. J., 1988. "A Regional Analysis of Direct Government Assistance Programs in Canada and their Impacts on the Beef and Hogs Sectors," Working Papers 244071, Agriculture and Agri-Food Canada.
    4. Stutzman, Sarah & Weiland, Brandon & Preckel, Paul & Wetzstein, Michael, 2017. "Optimal replacement policies for an uncertain rejuvenated asset," International Journal of Production Economics, Elsevier, vol. 185(C), pages 21-33.
    5. Crane, Donald R. Jr. & Spreen, Thomas H., 1979. "A Conceptual Model Of The Stubble Replacement Decision For Florida Sugarcane Growers," 1979 Annual Meeting, July 29-August 1, Pullman, Washington 277828, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Etherington, Dan M., 1977. "A Stochastic Model For The Optimal Replacement Of Rubber Trees," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(1), pages 1-19, April.
    7. Gutierrez, Paul H. & Dalsted, Norman L. & Jonk, Yvonne C., 1989. "Selection and Development of the Replacement Asset: The Case of the Replacement Beef Heifer," WAEA/ WFEA Conference Archive (1929-1995) 244997, Western Agricultural Economics Association.
    8. Weiland, Brandon & Sesmero, Juan Pablo & Preckel, Paul & Wetzstein, Michael E., 2017. "Can Wood Pellets Save Coal?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258250, Agricultural and Applied Economics Association.
    9. Innes, Robert & Carman, Hoy F., 1988. "Tax Reform And Beef Cow Replacement Strategy," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(2), pages 1-13, December.
    10. Feuz, Dillion, 1991. "The Optimal Prebreeding Target Weight for Replacement Beef Heifers," WAEA/ WFEA Conference Archive (1929-1995) 321483, Western Agricultural Economics Association.
    11. Mesike, Chinye S. & Sagay, Godwin A. & Okoh, Rosemary N., 2010. "Optimum replacement period for rubber plantation in Nigeria," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 49(3), pages 1-14.
    12. McClelland, John W. & Wetzstein, Michael E. & Noles, Richard K., 1987. "Optimal Replacement Policies for Recyclable Assets," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270113, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Melton, Bryan E., 1980. "Economics Of Beef Cow Culling And Replacement Decisions Under Genetic Progress," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 5(2), pages 1-12, December.
    14. Reid, Donald W. & Musser, Wesley N., 1984. "Some Theoretical and Methodological Issues in Analyzing Investment Decisions for Farmers," Regional Research Projects >1984: S-180 Annual Meeting, March 25-28, 1984, New Orleans, Louisiana 307234, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    15. Brake, John R. & Melichar, Emanuel, 1977. "PART VI. Agricultural Finance and Capital Markets," AAEA Monographs, Agricultural and Applied Economics Association, number 337218, january.
    16. Clary, Gregory M. & Jordan, Johnny W. & Thompson, Carl Eugene, 1984. "Economics Of Purchasing Genetically Superior Beef Bulls," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(2), pages 1-6, December.

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