Revisiting the Mitra-Wan Tree Farm.

The tree-farm model of T. Mitra and H. Wan (1985) contains novelties: a continuum of optimal cycles appear for small discounting and the cyclicality survives perturbations. To isolate the source of novelties, the author studies the simplest case: trees live naturally for two periods. This model specializes the general theory of multisector development under four conditions. It becomes a Ramsey type model, augmented by a cross-vintage constraint: the present acreage under trees, age n, must not be less than the acreage under trees age n + 1, one period hence. Novelties emerge when this constraint bounds the graph of the state-to-control correspondence. Copyright 1994 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.