Criteria for Determining the Optimum Replacement Pattern

This article is an attempt to clarify some confusion that has been apparent in the literature of agricultural economics in recent years with respect to providing a criterion for determining the optimum replacement pattern for long‐lived assets. In particular, for appreciating assets of the type represented by growing timber, the previous criteria have generally overlooked an important item of marginal cost: namely, the interest on the total revenue obtainable from the sale of the asset. These criteria have hence provided a replacement pattern which is longer than the the optimum.