The Stochastic Rotation Formula: A Comment
The stochastic Faustmann problem is solved by a simplified approach as compared with the rigorous analysis provided by Willassen (1998). The result is a closed-form rotation formula that simplifies to Faustmann’s formula in the deterministic setting. The formula is discussed for two sets of assumptions: one where the rotation cost is exogenous and fixed, and one where it is endogenous, and to be chosen optimally.
Published in Journal of Economic Dynamics and Control, 2002
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