To Harvest or Not to Harvest? An Analysis of Cutting Behavior on Federal Timber Sales Contracts

Randal R Rucker and Keith B Leffler

The Review of Economics and Statistics, 1988, vol. 70, issue 2, 207-13

Abstract: Economists have studied the environmental consequences and competitiveness of alternative sales techniques for publicly-owned na tural resources. Little attention has been paid, however, to fluctuat ions in revenues resulting from the "option" nature of public resourc e sales. This paper analyzes how the contract structure of public res ource sales leads to defaults and thereby revenue instability. Data on U.S. Forest Service timber sales contracts (which were modified i n the early 1980s in response to default problems) suggest that reduc ed contract lengths and more stringent requirements for extensions in crease harvest rates, but that price adjustment clauses are unlikely to have similar effects. Copyright 1988 by MIT Press.

Date: 1988
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