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A Hotelling‐Faustmann Explanation of the Structure of Christmas Tree Prices
Author(s) -
Vukina Tomislav,
Hilmer Christiana E.,
Lueck Dean
Publication year - 2001
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/0002-9092.00174
Subject(s) - tree (set theory) , economics , econometrics , mathematical economics , mathematics , combinatorics
We examine the relationship between a tree price and a tree age (height) using a Hotelling‐Faustmann type model of optimal plantation management, which accounts for the possibility of replanting and biological growth. The model 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.