Wood product differentiation in age-structured forestry

Matti Laukkanen and Olli Tahvonen

Resource and Energy Economics, 2023, vol. 73, issue C

Abstract: We develop the classic market-level, age-structured forest model by extending the description of forestry output from homogenous wood to a set of differentiated outputs such as sawlogs and biofuels. The extension changes several most established results on the long-run sustainable market equilibrium of forestry. We show the existence of an optimal steady state with two (or more) simultaneous rotation periods. This equilibrium yields a smooth timber flow without normal forest structure and thus deviates from existing normal forest results as well as results on equilibrium cycles. We further show that the optimal rotation structure depends on wood product demand and the demand for land outside forestry, another feature that is absent in previous model formulations.

Keywords: Optimal rotation; Normal forest; Wood products; Age-structured models; Vintage capital (search for similar items in EconPapers)
JEL-codes: C61 C62 Q15 Q23 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:73:y:2023:i:c:s0928765523000295

DOI: 10.1016/j.reseneeco.2023.101374

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