Abstract
The relationship between private forest investments and public cost sharing (government financial aid to private investment projects) was first analysed with an economic optimization model. In the general case the model predicted that cost-sharing causes substitution between private funding of investments and public aid. However, in some special cases complementarities were not ruled out. Next, the model predictions were tested with a translog cost function specification of forest investment fund shares. Aggregate data from Finland in years 1963–2000 were used. The substitution and own price elasticities of purely private, subsidized individual and subsidized collective investments are derived from maximum likelihood estimates of translog system model, allowing for investment scale effects. Investments supported by public funding behave in a strongly complementary fashion to each other. Some substitution of subsidized private funding for non-subsidized private funding was found. Strong scale effects and forest investment incentives were found among forest owners in response to public investment aid.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
