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The LeChatelier Principle under Production Uncertainty.

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Abstract

Under production uncertainty, it is shown that the LeChatelier principle holds for the derived demand of the "i"th factor if it is technically complementary (competing) with the risk-increasing (risk-reducing) quasi-fixed input and absolute risk aversion is decreasing. In addition, the LeChatelier principle for the output supply function holds if the quasi-fixed factor is an inferior (normal) and risk-increasing (risk-reducing) input and partial risk aversion is increasing. Copyright 1996 by The editors of the Scandinavian Journal of Economics.

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