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To Harvest or Not to Harvest? An Analysis of Cutting Behavior on Federal Timber Sales Contracts

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  • Rucker, Randal R
  • Leffler, Keith B

Abstract

Economists have studied the environmental consequences and competitiveness of alternative sales techniques for publicly-owned na tural resources. Little attention has been paid, however, to fluctuat ions in revenues resulting from the "option" nature of public resourc e sales. This paper analyzes how the contract structure of public res ource sales leads to defaults and thereby revenue instability. Data on U.S. Forest Service timber sales contracts (which were modified i n the early 1980s in response to default problems) suggest that reduc ed contract lengths and more stringent requirements for extensions in crease harvest rates, but that price adjustment clauses are unlikely to have similar effects. Copyright 1988 by MIT Press.

Suggested Citation

  • Rucker, Randal R & Leffler, Keith B, 1988. "To Harvest or Not to Harvest? An Analysis of Cutting Behavior on Federal Timber Sales Contracts," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 207-213, May.
    • Handle: RePEc:tpr:restat:v:70:y:1988:i:2:p:207-13
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    Cited by:

    1. Geoffrey Black, 2000. "The incentive effect in share contracts: The case of finite resources," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 6(3), pages 461-474, August.
    2. Wang, Sen & Bogle, Tim & van Kooten, G. Cornelis, 2012. "Forestry and the New Institutional Economics," Working Papers 130818, University of Victoria, Resource Economics and Policy.
    3. Brodrechtova, Yvonne, 2015. "Economic valuation of long-term timber contracts: Empirical evidence from Germany," Forest Policy and Economics, Elsevier, vol. 55(C), pages 1-9.
    4. Geoffrey Black, 2002. "A transaction cost model of contract choice: The case of petroleum exploration," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 8(3), pages 235-247, August.
    5. Ando, Amy, 1997. "The Price-Elasticity of Stumpage Sales from Federal Forests," RFF Working Paper Series dp-98-06, Resources for the Future.
    6. Størdal, Ståle, 2004. "Efficient timber pricing and purchasing behavior in forest owners' associations," Journal of Forest Economics, Elsevier, vol. 10(3), pages 135-147, November.

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