Journal ArticleDOI
Optimal allocation of a fixed production under price uncertainty
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A model of production allocation in the context of the theory of the firm under uncertainty of a firm that has just produced a known amount of an output and can allocate it to two possible ends: one with a certain price, the other with an uncertain price is considered.Abstract:
In this paper, we consider a model of production allocation in the context of the theory of the firm under uncertainty This is the case of a firm that has just produced a known amount of an output and can allocate it to two possible ends: one with a certain price, the other with an uncertain price We first establish conditions to determine whether the firm will make use of both ends or of only one of them In particular, we find a limit value for the certain price (which we call the frontier price) below which the firm decides to allocate the total amount of production to the uncertain end We then study comparative-static effects on the optimal output allocated to each end, and also on the frontier price Finally, we analyze an application concerning the middleman who buys the firm’s output in the certain end This is a pricing problem: namely obtaining the price in the certain end that the middleman must offer to the producer in order to attain a desired amount of output In two specific cases, we also provide closed-form expressions for the optimal allocation to both ends and for the frontier priceread more
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A note on the theory of the firm under multiple uncertainties
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Risk management methodology in the supply chain: a case study applied
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Sourcing decision under interconnected risks: an application of mean–variance preferences approach
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Sourcing decision under interconnected risks: an application of mean–variance preferences approach
TL;DR: In this article , the authors analyzed the comparative static effects under interconnected supply chain risks for a risk averse decision-maker, manufacturing and selling products in a regulated market under perfect competition.
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References
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Book
The economics of risk and time
TL;DR: In this article, the authors focus on richer applications of expected utility in finance, macroeconomics, and environmental economics, including the standard portfolio problem of choice under uncertainty involving two different assets, P the basic hyperplane separation theorem and log-supermodular functions as technical tools for solving various decision-making problems under uncertainty; s choice involving multiple risks; the Arrow-Debreu portfolio problem; consumption and saving; the equilibrium price of risk and time in an Arrow-debreu economy; and dynamic models of decision making.
Posted Content
Hedging and the Competitive Firm under Price Uncertainty
TL;DR: In this article, a risk-averse, competitive firm is assumed to face price uncertainty and must choose its level of output before the price uncertainty is resolved and may, at the same time, buy or sell output in a forward market at a fixed price.
Journal ArticleDOI
Joint Estimation of Risk Preference Structure and Technology Using Expo-Power Utility
TL;DR: In this article, a method was developed to permit joint estimation of risk preference structure, degree of risk aversion, and production technology, implemented using the Expo-Power utility function, which imposes no restrictions on risk preference structures.
Journal ArticleDOI
Specification and Estimation of Production Risk, Risk Preferences and Technical Efficiency
TL;DR: In this paper, the standard production risk model is extended to accommodate technical inefficiency and producers' attitude toward risk, and the technical efficiency model is generalized to accommodate production risk and producers attitudes toward risk.