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Price Stabilization and the Risk-Averse Firm

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  • Robert G. Chambers
  • John Quiggin

Abstract

An analytically simple and tractable approach to firm-level welfare analysis of complete and partial mean-preserving price stabilization for producers with general risk-averse preferences facing a stochastic technology is developed. Necessary and sufficient conditions for price stabilization to be welfare enhancing are derived under different assumptions of the producer's preferences and the producer's technology. Existing stabilization results for the risk-averse firm are shown to be corollaries of these more general results. Copyright 2003, Oxford University Press.

Suggested Citation

  • Robert G. Chambers & John Quiggin, 2003. "Price Stabilization and the Risk-Averse Firm," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 336-347.
    • Handle: RePEc:oup:ajagec:v:85:y:2003:i:2:p:336-347
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    File URL: http://hdl.handle.net/10.1111/1467-8276.00123
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    Cited by:

    1. Alexander E. Saak, 2004. "Spatial Production Concentration under Yield Risk and Risk Aversion," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 04-wp362, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. John Quiggin & Robert G. Chambers, 2006. "The state-contingent approach to production under uncertainty ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 50(2), pages 153-169, June.
    3. Catherine Larochelle & Jeffrey Alwang, 2013. "The Role of Risk Mitigation in Production Efficiency: A Case Study of Potato Cultivation in the Bolivian Andes," Journal of Agricultural Economics, Wiley Blackwell, vol. 64(2), pages 363-381, June.
    4. Quiggin, John & Chambers, Robert G., 2005. "The state-contingent approach to production and uncertainty," Risk and Sustainable Management Group Working Papers 151168, University of Queensland, School of Economics.
    5. Thorsten Lübbers, 2009. "Is Cartelisation Profitable? A Case Study of the Rhenish Westphalian Coal Syndicate, 1893-1913," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2009_09, Max Planck Institute for Research on Collective Goods.

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