Comparative statics for state-contingent technologies

The implications of supermodularity conditions in comparative-static analysis are analyzed for a generalized version of the separable-effort representation of a firm facing stochastic prices and a stochastic technology. Previous analysis is generalized in two ways. General risk-averse, as opposed to expected-utility, preferences are considered. The stochastic technology is represented by an Arrow–Debreu state-space representation. It is shown that results familiar from the theory of the price-taking firm in the absence of risk generalize to the uncertain case.