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Price uncertainty and the exhaustive firm

Burness, H. Stuart (1978) Price uncertainty and the exhaustive firm. Journal of Environmental Economics and Management, 5 (2). pp. 128-149. ISSN 0095-0696. doi:10.1016/0095-0696(78)90023-2.

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In the presence of a resource constraint the risk-averse exhaustive firm reacts to price uncertainty in a manner different than its competitive counterpart. In particular: (i) some results are independent of attitudes toward risk; (ii) comparative statics results differ from the no resource constraint case; and (iii) results depend upon the relative magnitudes of the discount rate and quasi-fixed costs. An assumption crucial to the relevance of risk-aversion in an intertemporal setting is the presence of imperfections in capital markets (i.e., the absence of complete contingent commodity markets).

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Additional Information:© 1978 by Academic Press, Inc. Received March 16, 1977; revised August 24, 1977. Financial support from the Institute of Mining and Minerals Research, University of Kentucky, and from the Energy Research Development Association, Grant No. EX-76-G-03-1305, California Institute of Technology Energy Research Program is gratefully acknowledged. I wish to thank Stuart Greenbaum, Soren Lemche, and Agnar Sandmo for helpful comments, and Tracy Lewis for a suggestion that greatly improved the exposition of this paper. Helpful comments were also received from Ralph d’ilrge and a pair of anonymous references. Any inadequacies are my own. Formerly SSWP 156.
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Energy Research and Development Administration (ERDA)EX-76-G-03-1305
Caltech Energy Research ProgramUNSPECIFIED
University of KentuckyUNSPECIFIED
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:83417
Deposited By: Jacquelyn Bussone
Deposited On:22 Nov 2017 17:26
Last Modified:15 Nov 2021 19:57

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