A micro economic analysis of a profit-sharing reforestation contract (I) A basic model and its results

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Abstract

This paper examines the characteristics of a profit-sharing reforestation contract from the viewpoint of the efficient use of forest resources. A profit-sharing reforestation contract is defined here as a contract where a planter rents the land for some period for forest management and shares the proceeds from the sale of stumpage with the land-owner in some ratio. The planter is considered to be a public sector in the paper. Under the four assumptions; namely 1) the world is in a deterministic steady state, 2) the stumpage proceeds function is concave and increasing during the rotation periods, 3) the discount rate of the land-owner coincides with that of the planter, and 4) the externality of forests does not exist; it is shown that the rotation periods and the share rates are unique. It also is shown that the rotation period is socially optimal and coincides with one derived from thefaustmannformula.

Original languageEnglish
Pages (from-to)185-190
Number of pages6
JournalNihon Ringakkai Shi/Journal of the Japanese Forestry Society
Volume75
Issue number3
Publication statusPublished - 1993 Sep 1
Externally publishedYes

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microeconomics
planters
reforestation
economic analysis
profits and margins
stumpage
public sector
discount rate
forest resources
forest resource
sales
forest management
land
contract
profit

ASJC Scopus subject areas

  • Forestry

Cite this

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abstract = "This paper examines the characteristics of a profit-sharing reforestation contract from the viewpoint of the efficient use of forest resources. A profit-sharing reforestation contract is defined here as a contract where a planter rents the land for some period for forest management and shares the proceeds from the sale of stumpage with the land-owner in some ratio. The planter is considered to be a public sector in the paper. Under the four assumptions; namely 1) the world is in a deterministic steady state, 2) the stumpage proceeds function is concave and increasing during the rotation periods, 3) the discount rate of the land-owner coincides with that of the planter, and 4) the externality of forests does not exist; it is shown that the rotation periods and the share rates are unique. It also is shown that the rotation period is socially optimal and coincides with one derived from thefaustmannformula.",
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