VIRTUAL PRICE APPROACH TO SHORT-TERM TIMBER SUPPLY UNDER CREDIT RATIONING

Duality and virtual prices are used in a Fisherian two period savings-consumption model to simplify the analysis of nonindustrial private timber supply under credit rationing. A possible way to measure the degree of credit rationing perceived by nonindustrial private forest owners is proposed. Slutsky-type decompositions for the derivatives of the credit-rationed timber supply function are calculated and the credit-rationed derivatives are related to corresponding derivatives in a perfect capital market. Further, the impact of the degree of credit rationing on the substitution and income effects of the exogenous variables are discussed and it is shown that the total effects are independent of the degree of credit rationing. The results help to interpret parameter estimates of private nonindustrial timber supply functions, especially if micro data are available. © 1990.