Tree Pricing"
BY: TOM VUKINA
North Carolina State University
College of Agriculture & Life Sciences
CHRISTIANA E. HILMER
Brigham Young University
Department of Economics
DEAN LUECK
Montana State University
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=252312
Date: November 29, 2000
Contact: DEAN LUECK
Email: Mailto:lueck at montana.edu
Postal: Montana State University
Bozeman, MT 59717-2920 USA
Phone: 406-994-7870
Fax: 406-994-4838
Co-Auth: TOM VUKINA
Email: Mailto:tom_vukina at ncsu.edu
Postal: North Carolina State University
College of Agriculture & Life Sciences
232 F Nelson
Box 8109
Raleigh, NC 27695-8109 USA
Co-Auth: CHRISTIANA E. HILMER
Email: Mailto:tia_hilmer at byu.edu
Postal: Brigham Young University
Department of Economics
130 Faculty Office Bldg.
Provo, UT 84602 USA
ABSTRACT:
We examine the relationship between a tree price and a tree age
(height) using a Hotelling-Faustmann model of optimal plantation
management, which accounts for the possibility of replanting and
biological growth. The model's predictions are tested using the
data on Christmas tree prices in North Carolina collected in
December 1997. The estimates show that, in general, the rates of
change in prices between adjacent age cohorts reflect a
competitive equilibrium in the capital market thus supporting
the Hotelling-Faustmann paradigm.
Keywords: Capital theory, discrete time optimal control,
forest management
JEL Classification: D40, Q20, Q30