Price Stabilization and the Risk-Averse Firm |
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| Authors: | Robert G Chambers and John Quiggin |
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| Institution: | Robert G. Chambers is professor of Agricultural and Resource Economics, University of Maryland, College Park and adjunct professor of Agricultural and Resource Economics, University of Western Australia;and John Quiggin is Australian Research Council Senior Professorial Fellow, University of Queensland. |
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| Abstract: | An analytically simple and tractable approach to firm-level welfare analysis of complete and partial mean-preserving price stabilization for producers with general risk-averse preferences facing a stochastic technology is developed. Necessary and sufficient conditions for price stabilization to be welfare enhancing are derived under different assumptions of the producer's preferences and the producer's technology. Existing stabilization results for the risk-averse firm are shown to be corollaries of these more general results. |
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| Keywords: | price stabilization duality risk aversion state-contingent technology |
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