ABSTRACT
Mc-Connell, Daberkow, and Hardie develop a Lagrangean model that allows both prices and costs to vary over time and also allows conversion of the site to an alternative use in the future. This chapter discusses the framework developed by McConnell, et al. in order to clear up the confusion surrounding the respective effects on rotation length from either one-time changes in the price level or some continuing rate of price increase. Bowes suggested a similar approach in an early communication. The variation on the McConnell, et al. and Bowes model permits only price to change through time. It provides conclusive answers with respect to the expected changes in the optimal rotation length with constant exponential price increases, a reasonable synthesis of historical experience. The chapter displays results from a dynamic programming application which confirm the anticipated theoretical results of relative price effects on optimal rotations.
