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On Total Price Uncertainty and the Behavior of a Competitive Firm

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  • Bahram Adrangi
  • Kambiz Raffiee

Abstract

In this paper, a general model of the competitive firm's behavior under output and factor (total) price uncertainty is developed to evaluate the role of market interdependencies in analyzing long-run equilibrium conditions and comparative statics analysis of increased uncertainty in output and input prices. It is demonstrated that the results shown in the literature are a special case of the findings reported here and market interdependencies play a central role in determining the firm's long-run equilibrium under uncertainty.

Suggested Citation

  • Bahram Adrangi & Kambiz Raffiee, 1999. "On Total Price Uncertainty and the Behavior of a Competitive Firm," The American Economist, Sage Publications, vol. 43(2), pages 59-65, October.
    • Handle: RePEc:sae:amerec:v:43:y:1999:i:2:p:59-65
    DOI: 10.1177/056943459904300206
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    References listed on IDEAS

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    1. Demers, Fanny & Demers, Michel, 1990. "Price uncertainty, the competitive firm and the dual theory of choice under risk," European Economic Review, Elsevier, vol. 34(6), pages 1181-1199, September.
    2. Paris, Quirino, 1989. "Broken symmetry, symmetry, and price uncertainty : Or, short and long-run comparative statics of the competitive firm," European Economic Review, Elsevier, vol. 33(6), pages 1227-1239, July.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Quirino Paris, 1988. "Long-Run Comparative Statics Under Output and Land Price Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(1), pages 133-141.
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