Theory of the firm facing uncertain demand revisited
Document Type
Journal article
Source Publication
Economic Theory
Publication Date
8-1-2004
Volume
24
Issue
2
First Page
457
Last Page
464
Keywords
Leland-type demand uncertainty, Principle of increasing uncertainty, Quantity-setting monopolistic firm, Single-crossing property
Abstract
Empirical evidence shows that the Principle of Increasing Uncertainty (PIU) introduced by Leland is easily violated. Necessary and sufficient conditions, without relying on the PIU assumption, under which risk-averse monopolistic producers reduce their output levels upon the introduction of the Leland-type demand uncertainty are derived.
DOI
10.1007/s00199-003-0417-9
Print ISSN
09382259
Funding Information
Financial support from the Academic Programme Research Grants (Business Programme) of Lingnan University Ref.# DB01A3 (Res201/Bus003). {DB01A3}
Publisher Statement
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Hau, A. (2004). Theory of the firm facing uncertain demand revisited. Economic Theory, 24(2), 457-464. doi: 10.1007/s00199-003-0417-9