Optimal Private and Public Harvesting under Spatial and Temporal Interdependence

CESifo Working Paper No. 452

April 2001

OPTIMAL PRIVATE AND PUBLIC HARVESTING
UNDER SPATIAL AND TEMPORAL
INTERDEPENDENCE

Abstract

This paper extends the Hartman model to include the case where two adjacent
stands may be interdependent in the provision of amenity services. We show
first that the relationship between the focal and exogenous rotation age
depends on the nature of their temporal interdependence, i.e., on what happens
to the degree of substitutability or complementarity between the stands when
the rotation age of the private focal stand changes. We then apply this analysis
to the determination of public rotation age in a two-stage game where the
government first decides upon its harvesting and private harvesting is chosen in
the second stage. Several new rules are derived for the socially optimal design
of public harvesting depending on the nature of interdependence between
private and public stands as well as on whether citizens have access to private
forests for recreation or not.

JEL Classification: Q23, H21

Keywords: Substitutability/complementarity, amenity valuation, private and
public rotation age.

Markku Ollikainen
University of Helsinki
Department of Economics and Management
P.O. Box 27

00014 Helsinki

Finland

[email protected]

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