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Title:Optimal harvesting under resource stock and price uncertainty PDF Logo
Authors:Alvarez, Luis H. R.
Koskela, Erkki
Issue Date:2005
Series/Report no.:CESifo working papers 1384
Abstract:We analyze optimal harvesting policy under stochastic price and stock dynamics. We state a set of weak conditions under which the optimal policy can be characterized by a single exercise threshold and show that the value of optimal harvesting and depletion policies can be expressed as the separable form according to which only the current price and the expected per capita growth rate affect the threshold, while under risk neutrality volatility of price dynamics will have no effect. Uncertainty makes waiting valuable and the optimal threshold is higher when harvesting can be exercised only once than in the sequential case.
Subjects:optimal harvesting
stochastic price and stock dynamics
single and sequential
JEL:H25
G31
D80
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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