Production Flexibility, Price Uncertainty and the Behavior of the Competitive Firm

摘要: THE PAST FEW YEARS HAVE WITNESSED important advances in the theory of firm under price uncertainty, with increasing attention being devoted to question how a firm's decisions are affected by its attitude towards risk taking.' Specifically, recent work McCall [7] and Sandmo [15] has established that competitive output uncertainty will be smaller, larger, or same as it would certainty, depending upon whether is averse, attracted neutral, respectively.3 Leland [6] shown that, addition mild restriction on stochastic demand function, these results obtained quite general conditions Sandmo, extend case quantity setting monopolist well.4 He also analyzes for indicates some additional complications arise case. Practically entire literature subject makes assumption (either implicitly explicitly) required make all production given period before selling known once made, they irrevocable.5 Demand sales then determined after market been established. In other words, no flexibility this rather restrictive assumption. The purpose paper develop one model relaxing determine having flexibilities responds uncertainty. considered here basis information about product, but possesses ability modify plans-at cost-after learns true price. Hence