Open AccessMODELING THE EFFECT OF INSTITUTIONAL CONSTRAINTS ON SHORT‐RUN TIMBER SUPPLY ON PUBLIC LAND: A CASE STUDY OF QUOTA HOLDERS IN ALBERTA
Author(s) -
Alavalapati Janaki R.R.,
Luckert Martin K.
Publication year - 1997
Publication title -
natural resource modeling
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.28
H-Index - 32
eISSN - 1939-7445
pISSN - 0890-8575
DOI - 10.1111/j.1939-7445.1997.tb00109.x
Subject(s) - constraint (computer aided design) , stumpage , shadow price , production (economics) , economics , budget constraint , shadow (psychology) , natural resource economics , microeconomics , business , agricultural economics , mathematical optimization , mathematics , geometry , psychotherapist , psychology
The short‐run timber supply behavior of quota holders is investigated in the face of institutional constraints and fixed stumpage prices. A dynamic optimization technique is used to predict production and estimate shadow prices of processing capacity constraints and annual allowable cut restrictions. Models for large, medium, and small tenure holders are formulated reflecting the different cost structures of different sized firms. Results indicate that all categories of quota holders incur substantial costs due to institutional constraints, and that eliminating both types of constraints simultaneously reduces costs much more than the combined savings from eliminating each type of constraint individually.