Risk Aversion, Price Uncertainty, and Irreversible Investments
نویسندگان
چکیده
منابع مشابه
Competition and irreversible investments under uncertainty
We examine the effect of competition on investment decisions in an industry in which each firm has a completely irreversible investment opportunity and the product market has positive externalities for a small market size and negative externalities for a large market size. In the latter case, which corresponds to the traditional competitive industries, firms invest sequentially as market profit...
متن کاملRisk, price regulation, and irreversible investment
We show that regulators’ price-setting, rate base, and allowed rate of return decisions are inextricably linked. Once regulators switch from traditional rate of return regulation, the irreversibility of much infrastructure investment significantly alters the results of the usual approach to price-setting, as exemplified by Marshall, Yawitz and Greenberg (1981). In particular, the practice of ‘o...
متن کاملImpact of Uncertainty and Risk Aversion on Price and Order Quantity in the Newsvendor Problem
We consider a single-period inventory model in which a risk-averse retailer faces uncertain customer demand and makes a purchasing-order-quantity and a selling-price decision with the objective of maximizing expected utility. This problem is similar to the classic newsvendor problem, except: (a) the distribution of demand is a function of the selling price, which is determined by the retailer; ...
متن کاملUncertainty , Risk Aversion and International Trade ∗
This paper develops a general equilibrium model of international trade in homogenous intermediate inputs. In the model, trade between countries is driven by uncertainty in the delivery of inputs. Because their managers are risk-averse, final good firms contract with multiple suppliers to decrease the variability of their profits. The analysis shows that risk diversification provides an incentiv...
متن کاملRisk and Uncertainty Aversion with Multidimensional Consequences
In a preceding paper (Montesano, 1999b) a systematic set of definitions on risk and uncertainty aversion was introduced with regard to unidimensional lotteries and acts. Taking into account only the preference preordering over the set of all possible lotteries and acts represented by the certainty equivalent function, many propositions were introduced and demostrated on global and local risk an...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2003
ISSN: 1556-5068
DOI: 10.2139/ssrn.556955