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The Newsboy Model: Changes in Risk and Price

  • Jorge Ibarra-Salazar


In this paper I extend the literature related with the newsboy model by analyzing the effect on orders of changes in risk and price. I show that risk aversion is necessary and sufficient condition for the newsboy to decrease orders when the demand suffers an FSD deterioration in risk, and analyze changes in price including an effect, which has been ignored in the literature. Copyright The Geneva Association 2005

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Article provided by Springer in its journal THE GENEVA RISK AND INSURANCE REVIEW.

Volume (Year): 30 (2005)
Issue (Month): 1 (June)
Pages: 99-109

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Handle: RePEc:kap:geneva:v:30:y:2005:i:1:p:99-109
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  1. Lau, Hon-Shiang & Lau, Amy Hing-Ling, 1997. "Some results on implementing a multi-item multi-constraint single-period inventory model," International Journal of Production Economics, Elsevier, vol. 48(2), pages 121-128, January.
  2. Athey, Susan, 2002. "Monotone Comparative Statics Under Uncertainty," Scholarly Articles 3372263, Harvard University Department of Economics.
  3. Ravi Kanbur, S. M., 1982. "Increases in risk with kinked payoff functions," Journal of Economic Theory, Elsevier, vol. 27(1), pages 219-228, June.
  4. Menezes, C F & Hanson, D L, 1970. "On the Theory of Risk Aversion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(3), pages 481-87, October.
  5. Baron, David P, 1971. "Demand Uncertainty in Imperfect Competition," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 12(2), pages 196-208, June.
  6. Athey, S, 1996. "Comparative Statics under Uncertainty : Single Crossing Properties and Log-Supermodularity," Working papers 96-22, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Hadar, Josef & Russell, William R., 1971. "Stochastic dominance and diversification," Journal of Economic Theory, Elsevier, vol. 3(3), pages 288-305, September.
  8. Leland, Hayne E, 1972. "Theory of the Firm Facing Uncertain Demand," American Economic Review, American Economic Association, vol. 62(3), pages 278-91, June.
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