TITLE:
Empirical Reserve Price in Forestry: Application to US Forest Service
AUTHORS:
Francis Didier Tatoutchoup
KEYWORDS:
Reserve Price, Auctions, Estimation, Forestry, Autoregressive Process
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.5,
September
12,
2016
ABSTRACT: This article exploits data from ascending auctions
from the US Forest Service to estimate an optimal reservation price in forestry
when prices are uncertain and when the forest owner endogenizes the cutting age
of trees. The results suggest that there is a huge gain in terms of the forest
owner profit to use the estimated optimal reservation price rather the
well-known reservation price proposed by Laffont and Maskin’s and Riley and Samuelson’s
which is suboptimal in the forestry context. Finally, the results also confirm
that the reservation price set by the US government agency is too low.