THEORY OF INPUT DEMAND UNDER PRICE UNCERTAINTY

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概要

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• This paper raises doubts regarding the validity of a few well-established propositions describing the behaviour of a competitive firm that faces uncertainty in the product price. The conventional approach relates price uncertainty and risk-aversion with production loss and claims that price uncertainty does not affect the choice of a cost-minimising technique. It is shown here that a firm choosing some inputs after the selling price is known may produce a more-than-certainty output and select a non-optimum technique. In a two-state decision making framework it is revealed that a firm choosing capital ex ante and labour ex post may hire more capital than what it would under certainty in order to hedge against future capital shortage. Some comparative studies and properties of input demand functions are included in the paper. Answers to a large number of questions related with trade policy and public finance depend crucially on how a decision maker reacts to uncertainty. In view of this, the exercises worked out here are important.

• 慶應義塾大学の論文

著者

• Das Sandwip

  Jawaharlal Nehru University

関連論文

• THEORY OF INPUT DEMAND UNDER PRICE UNCERTAINTY
• LABOUR SURPLUS ECONOMIES AND THE THEORY OF INTERNATIONAL TRADE

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