Steady State Analysis of the Finnish Forest Sector

During the recent years the total cost of round wood for the Finnish forest industry has been in the order of US$1.5 billion annually. The share of stumpage price represents roughly one half whereas harvesting, transportation etc. account for the rest. The purpose of this study is to investigate long term equilibrium prices for wood (and thereby total round wood costs) under various conditions of world market of wood products. In the first part of this paper a (discrete time) dynamic linear model for the forest sector is discussed. The steady state version of it is analyzed in more detail. An application of the steady state forestry model is carried out for the Finnish forests. As a result, alternative sustained yield solutions for the Finnish forests are obtained. In the analysis of the second part, a steady state sectoral model is adopted to carry out a Stackelberg equilibrium analysis for the round wood market. Further elaboration appeared necessary until the steady state model became suitable for this game theoretic analysis. This elaboration involves definitions of objective functions of the key parties (the forestry and the industry) in the forest sector game. A demand function of constant price elasticity is adopted for wood products

A Fortran Code for the Transshipment Problem

A code written in FORTRAN for PDP-11 is reported for solving the capacitated transshipment problem

Rank Order for a Rehabilitation Program Using Multiple Criteria

In this study we investigate an urban planning problem where an area is to be rehabilitated. The area is divided into several sub-areas any of which could be the starting point for the rehabilitation process. The ultimate goal is to find a rank order for the alternative sub-areas, which simultaneously solves the problem of where to start the rehabilitation. If all information are given on the ordinal scale, we could use e.g. the classical minimum violation principle to solve this problem. In this paper, we have generalized this approach to cover the cardinal scale and pairwise information

Practical Aspects of Value Efficiency Analysis

In this paper, we consider practical aspects for measuring Value Efficiency in Envelopment Analyis. Value efficiency is an efficiency concept that takes into account the decision maker's preferences.It was developed by Halme, Joro, Korhonen, Salo and Wallenius [1998]. The decision maker is asumed to compare alternatives using an implicitly known value function which reaches its maximum at the most preferred point on the efficient frontier. The unknown value function is assumed to be pseudoconcave and strictly increasing for outputs and strictly decreasing for inputs. The purpose of value effiiency analysis is to estimate a need to increase outputs and/or decrease inputs for reaching the indifference contour of the value function at the optimum. Because the value function is unknown, the indifference contours cannot be defined precisely. Value efficiency analysis never results in more pessimistic evaluation than in the case of a known function. To carry out value efficiency analysis, we have to locate the most preferred solution of the decision maker. In practice, this phase cannot be too complicated. We propose a few alternative ways to locate it and discuss the use of those ways in practical application

A note on efficient solutions for the linear bilevel programming problem

The solutions of linear bilevel programming problems frequently are non-Pareto-optimal. The potential increase in payoffs generated by Pareto improvements makes it worthwhile to consider methods with which to move the solution to the efficient frontier. Bargaining models offer one class of solutions, which, contrary to the original non-cooperative, sequential decision-making situation, however, assume cooperation. We make an attempt to maintain the original power structure by introducing the asymmetric Nash bargaining solution

Practical Aspects of Value Efficiency Analysis.

In this paper, we consider practical aspects for measuring Value Efficiency in Envelopment Analyis. Value efficiency is an efficiency concept that takes into account the decision maker's preferences.It was developed by Halme, Joro, Korhonen, Salo and Wallenius [1998]. The decision maker is asumed to compare alternatives using an implicitly known value function which reaches its maximum at the most preferred point on the efficient frontier. The unknown value function is assumed to be pseudoconcave and strictly increasing for outputs and strictly decreasing for inputs. The purpose of value effiiency analysis is to estimate a need to increase outputs and/or decrease inputs for reaching the indifference contour of the value function at the optimum. Because the value function is unknown, the indifference contours cannot be defined precisely. Value efficiency analysis never results in more pessimistic evaluation than in the case of a known function. To carry out value efficiency analysis, we have to locate the most preferred solution of the decision maker. In practice, this phase cannot be too complicated. We propose a few alternative ways to locate it and discuss the use of those ways in practical application.