In this paper we are investigating how production risk may influence the way a risk averse producer like a subsistence farmer chooses optimal input levels. Risk averse producers will take into account both the mean and the variance of output, and therefore we expect them to choose input levels...

In industries characterized by frequent innovation and high productivity growth, substantial variation in produced quantity and input use may occur, leading to increased costs. An effect that has received little attention is that inefficiency can exacerbate environmental impacts. This effect is...

The empirical literature on estimation of production technology mostly focuses on estimation of dual cost functions. Estimation of a profit function is not that common. Here, we formally test whether the production technology should be represented by a cost or profit function. We also derive...

High oil prices are normally expected to stimulate exploration and the development of new oil and gas fields. But over the last few years, financial analysts have focused strongly on short-term accounting return (RoACE) for benchmarking and valuation, and this has led to high capital discipline...