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Hedging and the regret theory of the competitive firm
Broll, Udo; Welzel, Peter; Wong, Kit Pong - 2019
This paper examines the production and hedging decisions of the competitive firm under price uncertainty when the firm … difference between the actual profit and the maximum profit attained by making the optimal production and hedging decisions had …
Persistent link: https://www.econbiz.de/10012112834
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Estimation of Moments and Production Decisions Under Uncertainty
Appelbaum, Elie; Ullah, Aman - 1998
The purpose of this paper is to examine production decisions under output price uncertainty. Using a nonparametric … examine the importance of higher moments in the firm's production decisions and to investigate underlying attitudes toward …
Persistent link: https://www.econbiz.de/10014061908
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The pure advantage of risk in production
Mandler, Michael - 2021
An increase in the riskiness of a technology will raise economy-wide expected output: the technology can be used intensively if its productivity realization is large and curtailed otherwise. Some investment in even the riskiest technologies can therefore bring Pareto improvements. The observed...
Persistent link: https://www.econbiz.de/10013235191
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Comparison of the production behavior of regret-averse and purely risk-averse firms
Guo, Xu; Wong, Wing Keung - In: Estudios de economía 46 (2019) 2, pp. 157-171
firms under certainty. This paper extends the theory by further investigating the effects of regret-aversion on production …-averse firms to produce more than the purely risk-averse counterparts and study the comparative statics of the optimal production …. We also develop properties of regret-aversion on production. …
Persistent link: https://www.econbiz.de/10012268101
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The impact of inflation risk on forward trading and production
Broll, Udo; Kit, Pong Wong - 2014
needs not always promote production should firms take in inflation seriously. …
Persistent link: https://www.econbiz.de/10011521691
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The firm under regret aversion
Broll, Udo; Welzel, Peter; Kit, Pong Wong - 2017
marginal effects of price uncertainty on production are both positive (negative) when regret aversion prevails if the random … of the price distribution as such plays a pivotal role in determining the regret-averse firm's production decision. …
Persistent link: https://www.econbiz.de/10011610117
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Exploring the role of uncertainty for corporate investment decisions in Germany
von Kalckreuth, Ulf - 2000
The impact of uncertainty on firms' investment outlays is subject to an ongoing debate. Theory identifies several channels. Irreversibility, financing constraints and risk aversion make a negative relationship between uncertainty and investment likely. On the other hand, the ability of firms to...
Persistent link: https://www.econbiz.de/10010295693
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Firms' investment decisions in response to demand and price uncertainty
Fuss, Catherine; Vermeulen, Philip - 2004
We estimate the effect of demand and price uncertainty on firms' investment decisions from a panel of manufacturing firms. Uncertainty measures are derived from firms' subjective qualitative expectations. They are close to their theoretical counterparts, the variances of future demand and price...
Persistent link: https://www.econbiz.de/10011506567
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Uncertainty, misallocation and the life-cycle growth of firms
Mäkynen, Eero; Vähämaa, Oskari - 2021
We develop a measure of static misallocation that separates uncertainty from misallocation generated by tax-like distortions. In the Finnish firm-level data, uncertainty accounts for the majority of ex post misallocation and explains a strong decreasing age-dependent trend in it. To understand...
Persistent link: https://www.econbiz.de/10012583062
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Risk-adjusted capital allocation and misallocation
David, Joel M.; Schmid, Lukas; Zeke, David - 2020
We develop a theory linking "misallocation," i.e., dispersion in marginal products of capital (MPK), to macroeconomic risk. Dispersion in MPK depends on (i) heterogeneity in firm-level risk premia and (ii) the price of risk, and thus is countercyclical. We document strong empirical support for...
Persistent link: https://www.econbiz.de/10012395487