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Renewable resource harvesting, market, and the no-deficit rule: The case of the French public timber supply

Author

Listed:
  • Philippe Delacote

    () (Laboratoire d'Economie Forestière, INRA - AgroParisTech)

  • Alexandre Sauquet

    (University of Ottawa, K1N 6N5 Ottawa, Canada)

Abstract

This paper assesses the links between prices, renewable resource harvesting, market power, sectorial optimum, and the no-deficit condition. The no-deficit condition implies that income must compensate for expenses each and every period. A direct implication is that the harvest behavior of the resource manager depends on a price threshold. If prices go below this threshold, harvest has to increase when the price decreases, in order to meet the budget constraint. This can conflict with the maximization of consumers and suppliers surpluses in the considered sector. We develop a theoretical model and test its predictions empirically for the case of the Office National des Forêts (ONF).

Suggested Citation

  • Philippe Delacote & Alexandre Sauquet, 2015. "Renewable resource harvesting, market, and the no-deficit rule: The case of the French public timber supply," Working Papers - Cahiers du LEF 2015-09, Laboratoire d'Economie Forestiere, AgroParisTech-INRA, revised Sep 2015.
  • Handle: RePEc:lef:wpaper:2015-09
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    File URL: http://www6.nancy.inra.fr/lef/Cahiers-du-LEF/2015/2015-09
    File Function: First version, 2010
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    More about this item

    Keywords

    No-deficit rule ; Forest Sector ; Public Agency ; Threshold models;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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