The Equilibrium Price Path of Timber in the Absence of Replanting
AbstractThe forestry literature has sought to describe competitive equilibria by fi rst solving social planning problems. This "indirect" approach may cease to be useful in determining market equilibrium if the government intervenes. The equilibrium price path of timber is characterized directly here under the assumption that once a site is cleared, the site is used for some other purpose of exogenous value. While extreme, this assumption permits us to show that familiar Her ndahl results from the Hotelling literature extend to forestry economics: if di ffering in age, older trees are harvested fi rst; if diff erent in site value, trees on more valuable land are harvested first. As trees of the same vintage (or site value) are harvested, the timber price may decline during intervals when wood volume grows faster than the rate of interest. As the concluding section suggests, some of these results reappear in special cases of the model with replanting.
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Bibliographic InfoPaper provided by Resources For the Future in its series Discussion Papers with number dp-12-38.
Date of creation: 16 Aug 2012
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trees; forestry; Hotelling; Herfindahl; Faustmann; U-shaped price path;
Find related papers by JEL classification:
- Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
- Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-03 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Lyon, Kenneth S., 1981. "Mining of the forest and the time path of the price of timber," Journal of Environmental Economics and Management, Elsevier, vol. 8(4), pages 330-344, December.
- Salo, Seppo & Tahvonen, Olli, 2002. "On Equilibrium Cycles and Normal Forests in Optimal Harvesting of Tree Vintages," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 1-22, July.
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- Julien Daubanes & Pierre Lasserre, 2012. "Non-Renewable Resource Supply: Substitution Effect, Compensation Effect, and All That," CIRANO Working Papers 2012s-28, CIRANO.
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