This study of the firm under uncertainty relaxes the standard single production cycle assumption. Under realistic circumstances, a forward-looking risk-averse firm will produce more than a risk-neutral firm, and an increase in the mean-preserving price spread will increase the risk-averse firm's...

This paper examines the incentive of atomistic agricultural producers within a specific geographical region to differentiate and collectively market products. We develop a model that allows us to analyze the market and welfare effects of the main types of real-world producer organizations, using...

The paper motivates and proposes a closed-form option-pricing model for markets such as grains or livestock where the price level can be expected to revert to expected production costs. The model suggests that traditional option pricing models will overprice long-term options on these markets.

The welfare implications of intellectual property protection (IPP) for private sector agricultural research are analyzed, focusing on the realistic cases in which countries provide different IPP levels, technology spills over across countries, and the public sector is involved in research. A...

A theory of short-run competitive firm behavior allowing for nonmyopic risk aversion, randomness in input and output prices, as well as forward trading and storage of final good and material input is introduced. If the firm is a forward looking risk-averse expected-utility maximizer, separation...

Decision making under unknown true parameters (estimation risk) is discussed along with Bayes and parameter certainty equivalent (PCE) criteria. Bayes criterion provides the solution for optimal decision making under estimation risk in a manner consistent with expected utility maximization. The...

Estimation risk occurs in the almost universal situation where parameters of importance for decision making are not known with certainty. Bayes' criterion is the procedure consistent with expected utility maximization in the presence of estimation risk. Three interrelated problems in the...

Historically, the U.S. government has had a substantial involvement in the agricultural sector. Lence and Hayes use a dynamic, three-commodity, rational-expectations storage model to compare the impact of the Federal Agricultural Improvement and Reform (FAIR) Act of 1996 with a free-market...

Production and hedging in both forward and options markets are analyzed for forward-looking firms that maximize expected utility. In the presence of unbiased forward and options prices, it is shown that such firms will use options as hedging instruments. This result contrasts with the...

The study focuses on the production and hedging behavior of forward-looking risk-averse competitive firms. It is shown that there is separation between production and hedging. Optimal production for a forward-looking firm is identical to that of an otherwise equivalent myopic firm. However, the...