The Competitive Firm under both Input and output Price Uncertainties with Futures Markets and Basis Risks

We study the case of a competitive firm exposed to both input and output price risk. In an expected utility framework, we elicit the separation theorem, and show the positive impact of derivatives markets on the optimal output. We also show that in the case of several inputs, the risk-averse firm accord a certainty premium to the most certain input.

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Year of publication:	2004
Authors:	Sevi, B.
Institutions:	Centre de Recherche en Économie et Droit de l'Énergie, Faculté de sciences économiques
Subject:	UNCERTAINTY \| RISK AVERSION \| PRUDENCE \| FUTURES MARKETS

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Extent:	application/pdf
Series:	Cahiers du CREDEN (CREDEN Working Papers).
Type of publication:	Book / Working Paper
Language:	English
Notes:	19 pages
Classification:	D81 - Criteria for Decision-Making under Risk and Uncertainty ; D21 - Firm Behavior
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005739835