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- Title
Behavioral Modes for a Firm Facing an Uncertain Supply or Demand Curve .
- Authors
Lofgren, Karl-Gustaf; Ranneby, Bo
- Abstract
Abstract This paper contains a theoretical analysis of the behavior of a firm facing a stochastic supply and demand curve. Certain behavioral modes can be ranked under weaker conditions than in corresponding studies on stochastic demand. For other comparisons, we derive sufficient conditions for one mode to dominate another. Earlier results indicate that a firm which faces demand uncertainty prefers price variability to quantity variability. It is shown by a counterexample that the "price variability preference", which is troublesome for proponents of temporary fix-price equilibrium models, is a consequence of a restrictive stochastic specification.
- Subjects
BUSINESS enterprises; SUPPLY &; demand; DEMAND function
- Publication
Scandinavian Journal of Economics, 1987, Vol 89, Issue 1, p39
- ISSN
0347-0520
- Publication type
Article
- DOI
10.2307/3440483