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The complicated process of public forest land allocation involves competing economies of scale. While harvesting cost economies of scale may benefit harvesters, where average costs decline as contiguous harvested acreage increases, larger harvested areas can generate diseconomies in terms of environmental and ecosystem damage. This paper extends existing timber rotation models to more completely account for spatial synergies. Simulations are used to illustrate potential impacts. Simulations find that adjacency economies of scale may be an important determinant of the optimal spatial harvest configuration and intertemporal harvest sequence. The consequences of scheduling harvests ignorant of fixed costs are also discussed.


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