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Duality and Faustmann: Implications for the Evaluation of Landowner Behavior

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This paper examines the behavioral consequences when landowners seek to minimize costs rather than maximize profits. We derive a cost function that is dual to the net present value function in the Faustmann Model. This cost function provides a theoretical foundation for studies that estimate forest production costs. We use comparative statics methodology to derive qualitative results for changes in selected policies and exogenous parameters. We find that the qualitative impacts under cost minimization are usually unambiguous. Qualitative impacts under profit maximization are usually ambiguous. This implies that behavioral impacts are usually easier to assess a priori, when landowners minimize costs rather than maximize profits. For. Sci. 46(1):132-138.

Keywords: Landowners; comparative statics; cost minimization; forest taxes; planting subsidies

Document Type: Journal Article

Publication date: February 1, 2000

More about this publication?
  • Forest Science is a peer-reviewed journal publishing fundamental and applied research that explores all aspects of natural and social sciences as they apply to the function and management of the forested ecosystems of the world. Topics include silviculture, forest management, biometrics, economics, entomology & pathology, fire & fuels management, forest ecology, genetics & tree improvement, geospatial technologies, harvesting & utilization, landscape ecology, operations research, forest policy, physiology, recreation, social sciences, soils & hydrology, and wildlife management.
    Forest Science is published bimonthly in February, April, June, August, October, and December.

    2015 Impact Factor: 1.702
    Ranking: 16 of 66 in forestry

    Also published by SAF:
    Journal of Forestry
    Other SAF Publications
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