A Stochastic Asset Replacement Model for Rejuvenated Assets

G. Scott Smith and Michael E. Wetzstein

American Journal of Agricultural Economics, 1992, vol. 74, issue 2, 378-387

Abstract: Stochastic returns generated by a productive asset are investigated for the replacement problem with rejuvenation. Optimal replacement and rejuvenation conditions, given collinearities among multiple outputs, are considered for alternative levels of producer risk preference. This methodology is applied to a laying hen replacement problem. Results indicate that risk-averse producers should consider less rejuvenation and shorter rejuvenation production periods. Also, replacement decisions should occur later in the year for peak production to coincide with high output prices.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:74:y:1992:i:2:p:378-387.

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