Nonlinear Taxes and Intertemporal Resource Management. The Case of Timber.

The theory of forest management is applied by estimating a model of timber supply under nonlinear income taxation. Timber supply is derived from a two-period optimization problem, which provides a simple framework for dealing with intertemporal decisions. A contribution of the paper is to allow for heterogeneity in the description of the biotechnological properties of the forest resource. The model is estimated using cross-section data over private, nonindustrial forest owners in Sweden by applying the maximum likelihood method. Behavioral responses to taxation in terms of timber supply are also evaluated. Copyright 1993 by The editors of the Scandinavian Journal of Economics.