On Solving the Multirotational Timber Harvesting Problem with Stochastic Prices: A Linear Complementarity Formulation
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- Margaret Insley
- Department of Economics University of Waterloo Waterloo Ontario Canada
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- Kimberly Rollins
- Department of Resource Economics University of Nevada Reno Nevada
書誌事項
- 公開日
- 2005-08
- 権利情報
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- http://onlinelibrary.wiley.com/termsAndConditions#vor
- DOI
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- 10.1111/j.1467-8276.2005.00759.x
- 公開者
- Wiley
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説明
<jats:title>Abstract</jats:title><jats:p>This article develops a two‐factor real options model of the harvesting decision over infinite rotations assuming a known stochastic price process and using a rigorous Hamilton‐Jacobi‐Bellman methodology. The harvesting problem is formulated as a linear complementarity problem that is solved numerically using a fully implicit finite difference method. This approach is contrasted with the Markov decision process models commonly used in the literature. The model is used to estimate the value of a representative stand in Ontario's boreal forest, both when there is complete flexibility regarding harvesting time and when regulations dictate the harvesting date.</jats:p>
収録刊行物
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- American Journal of Agricultural Economics
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American Journal of Agricultural Economics 87 (3), 735-755, 2005-08
Wiley