Publication Date:
1986-10-01
Description:
Log and stumpage price formation in the United States and China appear mathematically identical, but are radically different. In the United States, prices are derived from the demand for final wood products in competitive markets. In China, prices are set centrally based on direct costs of production. The system is borrowed from Russia and is based on a theory of labor value that ignores time and interest rates. We explore the existing Chinese price determination model and Chinese proposals to change it, as prices have had little relation to the value of wood in use or the cost of wood from other sources. A cost-based model has few incentives to minimize costs of production, but ignoring the cost of capital has made stumpage prices abnormally low. Both systems are products of different philosophies of value and evolution in pricing technology must occur in the context of the parent economy.
Print ISSN:
0045-5067
Electronic ISSN:
1208-6037
Topics:
Agriculture, Forestry, Horticulture, Fishery, Domestic Science, Nutrition
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