Bequests, Credit Rationing and in situ Values in the Faustmann–Pressler–Ohlin Forestry Model

Olli Tahvonen

Scandinavian Journal of Economics, 1998, vol. 100, issue 4, 781-800

Abstract: The problem of determining the optimal time to stop the “pure aging process” has a 150‐year history in forestry. The success of the rotation model lies in the fact that it is taken to be theoretically sound, empirically testable and has clear practical relevance. Nonetheless, empirical findings show that timber supply depends on variables missing from the original formulation. Previous research has addressed the problem by abandoning the pure aging description of forests. This study demonstrates that the optimal aging process becomes forest‐owner specific under imperfect land and capital markets and if the owner has in situ preferences.

Date: 1998
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