Designing voluntary subsidies for forest owners under imperfect information
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Designing voluntary subsidies for forest owners under imperfect information. / Jensen, Frank; Thorsen, Bo Jellesmark; Abildtrup, Jens; Jacobsen, Jette Bredahl; Stenger, Anne.
In: Journal of Forest Economics, Vol. 37, No. 1, 2022, p. 73-101.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Designing voluntary subsidies for forest owners under imperfect information
AU - Jensen, Frank
AU - Thorsen, Bo Jellesmark
AU - Abildtrup, Jens
AU - Jacobsen, Jette Bredahl
AU - Stenger, Anne
N1 - Publisher Copyright: © 2022 F. Jensen, B. J. Thorsen, J. Abildtrup, J. B. Jacobsen and A. Stenger.
PY - 2022
Y1 - 2022
N2 - In this paper, we study voluntary subsidies offered to forest owners to increase rotation periods. We assume that a forest owner takes private amenity values into account when making decisions, but these values are lower than the social amenity values; therefore, an amenity value externality arises. Furthermore, the regulator has imperfect information regarding the timber profit of the forest owner. We show that voluntary subsidies must reflect the difference between (a) private and social amenity values and (b) timber profit among the possible types of the forest owner. In this way, we solve the amenity value externality and the problem of imperfect information about timber profit in a second-best optimal way. We have also investigated what happens if the regulator excludes private amenity values when fixing voluntary subsidies and we show that two sources of efficiency losses arise: (a) non-optimal rotation periods and (b) non-truthful revelation of private information.
AB - In this paper, we study voluntary subsidies offered to forest owners to increase rotation periods. We assume that a forest owner takes private amenity values into account when making decisions, but these values are lower than the social amenity values; therefore, an amenity value externality arises. Furthermore, the regulator has imperfect information regarding the timber profit of the forest owner. We show that voluntary subsidies must reflect the difference between (a) private and social amenity values and (b) timber profit among the possible types of the forest owner. In this way, we solve the amenity value externality and the problem of imperfect information about timber profit in a second-best optimal way. We have also investigated what happens if the regulator excludes private amenity values when fixing voluntary subsidies and we show that two sources of efficiency losses arise: (a) non-optimal rotation periods and (b) non-truthful revelation of private information.
U2 - 10.1561/112.00000541
DO - 10.1561/112.00000541
M3 - Journal article
AN - SCOPUS:85124360193
VL - 37
SP - 73
EP - 101
JO - Journal of Forest Economics
JF - Journal of Forest Economics
SN - 1104-6899
IS - 1
ER -
ID: 300444454