This paper studies two-part tariffs with explicit consideration of cost uncertainty and risk aversion. It finds that … firms charge a risk premium over expected marginal cost for each unit they sell. This pricing rule is socially optimal if … and only if the modeled market is fully covered in equilibrium. A risk-averse monopoly tends to generate less aggregate …

We develop a dynamic model of firm investment under uncertainty that captures firms' risk attitude using quantile …-quantile of its value next period. In our framework, τ ∈ (0, 1) parametrizes the firm's attitude toward downside risk. The model … value of future marginal profits -- investment depends directly on the firm's risk attitude. We further integrate our model …