Criteria for optimal production under uncertainty. The state-contingent approach
The state-contingent approach to production economics presented by Chambers and Quiggin provides a new basis for deriving optimality criteria for production under uncertainty. In the present paper criteria are formally derived for risk-averse producers. It is not possible to derive useful criteria for strictly risk-averse producers, but useful criteria for risk-neutral producers are presented for three different types of input. Based on a formal definition of 'good' and 'bad' states of nature, the use of inputs and levels of production of strictly risk-averse producers are compared to those of risk-neutral producers. Depending on the type of input, risk-averse producers may use more or less input than risk-neutral producers. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2003.
Year of publication: |
2003
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Authors: | Rasmussen, Svend |
Published in: |
Australian Journal of Agricultural and Resource Economics. - Australian Agricultural and Resource Economics Society - AARES. - Vol. 47.2003, 4, p. 447-476
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Publisher: |
Australian Agricultural and Resource Economics Society - AARES |
Saved in:
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