Behavioral Modes for a Firm Facing an Uncertain Supply or Demand Curve.
This paper contains a theoretical analys is of the behavior of a firmfacing a stochastic supply and demand curve. Certai n behavioral modes can be ranked under weaker conditions than in corresponding s tudies on stochastic demand. For other comparisons, the authors derive sufficien t conditions for one mode to dominate another. Earlier results indicate that a f irm which faces demand uncertainty prefers price variability to quantity variabi lity. It is shown by a counter example that the "price variability preference," which is troublesome for proponents of temporary fixed-price equilibrium models, is a consequence of restrictive stochastic specification. Copyright 1987 by The editors of the Scandinavian Journal of Economics.
Year of publication: |
1987
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Authors: | Lofgren, Karl Gustaf ; Ranneby, Bo |
Published in: |
Scandinavian Journal of Economics. - Wiley Blackwell, ISSN 1467-9442. - Vol. 89.1987, 1, p. 39-54
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Publisher: |
Wiley Blackwell |
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