This article presents a comparative analysis of possible postponement strategies in a two-stage decision model where firms make three decisions: capacity investment, production (inventory) quantity, and price. Typically, investments are made while the demand curve is uncertain. The strategies differ in the timing of the operational decisions relative to the realization of uncertainty. We show h...

In many studies the assumption is made that traders only encounter one type of price risk. In reality, however, traders are exposed to multiple price risks, and often have several relevant derivative instruments available with which to hedge price uncertainty. In this study, commodity, foreign exchange, and freight futures contracts are analyzed for their effectiveness in reducing price uncerta...

prices of meat in the international and a nation's internal markets tend to be closely related to each other. this relation could be sometimes harmful and due to lagged responses, meat prices at the internal market would subsequently increase as input prices increase at either the internal or international market. price uncertainty and transmition are two important problems facing a nation...

The paper discusses a way in which price uncertainty may affect the extent of idiosyncratic, uninsurable risks in an incomplete markets economy with nominal assets and thereby affect output and welfare. Although the returns on these assets are constant and riskfree in nominal terms, price uncertainty causes their real returns to be stochastic. This affects the ability of households to diversify...

We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because nominal prices are observed with delay as in Jovanovic & Ueda (1997). More constrained firms sign contracts that are less indexed to the nominal price and, as a result, their investment is more sensitive to nominal price shocks. We also find that the overall degree of nominal indexat...

T paper provides a model of the competitive newsvendor problem in which there is price competition following the inventory decisions. Using the biform game formalism of Brandenburger and Stuart (2004), the price competition is modeled by considering the core of the induced cooperative game. Such an analysis allows price competition to be modeled without a priori assumptions about price-setting ...

In this paper we examine how increases in intertemporal price uncertainty affect the welfare of a consumer. In the preference structure of the consumer the coefficient of relative risk aversion and the elasticity of intertemporal substitution (EIS) are parametrically independent. We find that under empirically plausible circumstances, for each given degree of risk aversion an increase in price ...

We apply nonparametric panel data kernel regression to investigate production risk, output price uncertainty, and risk attitudes of Polish dairy farms based on a firm-level unbalanced panel data set that covers the period 2004–2010. We compare different model specifications and different approaches for obtaining firm-specific measures of risk attitudes. We found that Polish dairy farmers are ri...

generally, high oil prices slow economic growth, cause inflationary pressures and creates global imbalances. in addition, oil price volatility increase uncertainty and restrain the much-needed investment in the capital market. thus, this paper applies the augmented dickey fuller and johansen co-integration tests in which the effect of oil price volatility, crude oil price and stock price is ana...

For two decades, environmental economists have generally maintained that benefit uncertainty is irrelevant for choosing between price and quantity instruments, but that cost uncertainty matters, with the identity of the efficient instrument depending upon the relative slopes of the marginal benefit and cost functions. But, in the presence of simultaneous, correlated uncertainty, such policy ins...