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Timber Management Decision Making under Imperfect Capital Markets
Author(s) -
Murphy Paul A.,
Fortson James C.,
Bethune James E.
Publication year - 1977
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 - 10.2307/1240020
Subject(s) - imperfect , capital market , capital (architecture) , economics , microeconomics , capital market imperfections , investment (military) , capital budgeting , limit (mathematics) , selection (genetic algorithm) , business , finance , computer science , mathematical analysis , philosophy , linguistics , mathematics , archaeology , artificial intelligence , politics , project appraisal , political science , law , history
Capital market imperfections seldom have been considered in the choice of financial criteria for making timber management decisions. A forest planning model for evenaged timber management is developed to evaluate criterion selection under imperfect markets. Some investment rules are shown to be equivalent to maximizing the firm's liquidation value for certain capital market conditions. Although imperfect capital markets severely limit wealth accumulation, small deviations from the optimal harvesting schedules do not severely affect the firm's value. Much concern about criterion selection would evaporate if the firm's investing and financing functions were integrated into a single process.