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Risk-Neutral Monopolists are Variance-Averse

Author

Listed:
  • Roland Kirstein

    (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

Abstract

If the production of a risk-neutral monopolist is in uenced by a random variable, then the expected pro t is decreasing in the variance of the production process.

Suggested Citation

  • Roland Kirstein, 2009. "Risk-Neutral Monopolists are Variance-Averse," FEMM Working Papers 09012, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    • Handle: RePEc:mag:wpaper:09012
    as

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    File URL: http://www.ww.uni-magdeburg.de/fwwdeka/femm/a2009_Dateien/2009_12.pdf
    File Function: First version, 2009
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    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Isik, Murat, 2005. "Environmental regulation and the optimal location of the risk-averse firm under uncertainty," Environment and Development Economics, Cambridge University Press, vol. 10(4), pages 435-452, August.
    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. Serguei Kaniovski, 2003. "Risk-Averse Monopolist with Aspiration," WIFO Working Papers 196, WIFO.
    5. Gibbons, Robert, 1987. "Piece-Rate Incentive Schemes," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 413-429, October.
    6. Holden, Craig W. & Subrahmanyam, Avanidhar, 1994. "Risk aversion, imperfect competition, and long-lived information," Economics Letters, Elsevier, vol. 44(1-2), pages 181-190.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Alexei Alexandrov, 2015. "When Should Firms Expose Themselves to Risk?," Management Science, INFORMS, vol. 61(12), pages 3001-3008, December.

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    More about this item

    Keywords

    Risk-aversion; correlated random variables; market power;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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