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- Title
A Proposition on Imperfect Stumpage Markets.
- Authors
Comolli, Paul M.
- Abstract
This article extends the Faustmann model of the optimum forest rotation to the more general setting where stumpage prices vary over the growing period in a known or possibly unknown way. Considering the usual lengths of time involved in forest rotations, this extension is easily justified; yet, surprisingly, little published work appears to be available. In the absence of perfect foresight, one could interpret known future prices as those that are rationally expected to prevail in stumpage market equilibrium. It is on this assumption that the analysis proceeds. However, the main conclusion is valid in the more realistic situation where entrepreneurs' expectations on future stumpage prices are not necessarily rational. Certainly, market price is higher under monopoly if demand is stationary as assumed by Nautiyal and Fowler. However, when demand is not, nothing conclusive can be said in general. This may be underscored by a simple numerical example. The general point may be stressed by noting that, during periods of low rates of discount in forestry and rapidly rising stumpage prices, the monopolist may behave optimally by harvesting later than the perfectly competitive industry. It is this possibility that the Nautiyal-Fowler analysis excludes.
- Subjects
STUMPWOOD; LAND economics; ENVIRONMENTAL economics; FORESTS &; forestry; PRICES; CONSUMPTION (Economics)
- Publication
Land Economics, 1984, Vol 60, Issue 3, p297
- ISSN
0023-7639
- Publication type
Article
- DOI
10.2307/3146190