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Article: Background risk and the theory of the competitive firm under uncertainty

TitleBackground risk and the theory of the competitive firm under uncertainty
Authors
Issue Date1996
PublisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/BOER
Citation
Bulletin Of Economic Research, 1996, v. 48 n. 3, p. 241-251 How to Cite?
AbstractThis paper examines the optimal production decision of a firm under output price risk à la Sandmo when the firm also faces a dependent background risk. It is shown that standard risk aversion plus a non-negative association between the output price risk and the background risk are sufficient to ensure a reduction in the firm's optimal output upon introduction of the background risk. The paper investigates the impact of a deterministic transformation of the background risk on the firm's optimal production decision. It is shown that decreasing absolute risk aversion in Ross' sense is among the sufficient conditions that generate an unambiguous negative comparative static result.
Persistent Identifierhttp://hdl.handle.net/10722/177640
ISSN
2015 Impact Factor: 0.261
2015 SCImago Journal Rankings: 0.280
References

 

DC FieldValueLanguage
dc.contributor.authorWong, KPen_US
dc.date.accessioned2012-12-19T09:39:24Z-
dc.date.available2012-12-19T09:39:24Z-
dc.date.issued1996en_US
dc.identifier.citationBulletin Of Economic Research, 1996, v. 48 n. 3, p. 241-251en_US
dc.identifier.issn0307-3378en_US
dc.identifier.urihttp://hdl.handle.net/10722/177640-
dc.description.abstractThis paper examines the optimal production decision of a firm under output price risk à la Sandmo when the firm also faces a dependent background risk. It is shown that standard risk aversion plus a non-negative association between the output price risk and the background risk are sufficient to ensure a reduction in the firm's optimal output upon introduction of the background risk. The paper investigates the impact of a deterministic transformation of the background risk on the firm's optimal production decision. It is shown that decreasing absolute risk aversion in Ross' sense is among the sufficient conditions that generate an unambiguous negative comparative static result.en_US
dc.languageengen_US
dc.publisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/BOERen_US
dc.relation.ispartofBulletin of Economic Researchen_US
dc.titleBackground risk and the theory of the competitive firm under uncertaintyen_US
dc.typeArticleen_US
dc.identifier.emailWong, KP: kpwongc@hkucc.hku.hken_US
dc.identifier.authorityWong, KP=rp01112en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1111/j.1467-8586.1996.tb00634.x-
dc.identifier.scopuseid_2-s2.0-0000913450en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0000913450&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume48en_US
dc.identifier.issue3en_US
dc.identifier.spage241en_US
dc.identifier.epage251en_US
dc.publisher.placeUnited Kingdomen_US
dc.identifier.scopusauthoridWong, KP=7404759417en_US

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