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The short- and long-run comparative statics of uncertainty

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  • Hennessy, David A.

Abstract

If a two-input stochastic reward function is supermodular, then a first-degree stochastic shift increases both inputs, and the more variable factor is more responsive in the long run. These results hold for second-degree dominance under additional curvature conditions. Author Keywords: Le Chatelier principle; Long run; Short run; Supermodular
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  • Hennessy, David A., 1997. "The short- and long-run comparative statics of uncertainty," Economics Letters, Elsevier, vol. 55(3), pages 347-353, September.
    • Handle: RePEc:eee:ecolet:v:55:y:1997:i:3:p:347-353
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