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Competitive Industry Equilibrium under Uncertainty and Free Entry


  • Chavas, Jean-Paul
  • Pope, Rulon D
  • Leathers, Howard


This paper investigates the properties of industry equilibrium under pric e uncertainty given free entry and exit. For any form of risk-averse behavior, it is shown that an increase in demand uncertainty (as meas ured by a mean-preserving spread) increases mean output price and red uces output of firms in long-run equilibrium. Copyright 1988 by Oxford University Press.

Suggested Citation

  • Chavas, Jean-Paul & Pope, Rulon D & Leathers, Howard, 1988. "Competitive Industry Equilibrium under Uncertainty and Free Entry," Economic Inquiry, Western Economic Association International, vol. 26(2), pages 331-344, April.
  • Handle: RePEc:oup:ecinqu:v:26:y:1988:i:2:p:331-44

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    Cited by:

    1. Amresh Hanchate, 1996. "Nonprofit pricing of services under cost uncertainty," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 20(2), pages 133-144, June.
    2. Hennessy, David A., 1998. "Industry equilibrium under price distribution and cost shifts," Journal of Economics and Business, Elsevier, vol. 50(6), pages 509-523, November.
    3. Flacco, Paul R. & Larson, Douglas M., 1990. "Measuring Scale and Technical Change from Observable Data Under Uncertainty," 1990 Annual meeting, August 5-8, Vancouver, Canada 271065, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Iraj J. Fooladi & Nargess K. Kayhani, 2003. "Is Entrepreneurship Only About Entering A New Business," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 8(2), pages 1-11, Summer.
    5. Hennessy, David A., 1997. "Equilibrium in production and futures markets," Journal of Economics and Business, Elsevier, vol. 49(5), pages 399-418.
    6. Appelbaum, Elie & Lim, Chin, 1982. "Long-run industry equilibrium with uncertainty," Economics Letters, Elsevier, vol. 9(2), pages 139-145.
    7. Haruna, Shoji, 1996. "Industry equilibrium, uncertainty, and futures markets," International Journal of Industrial Organization, Elsevier, vol. 14(1), pages 53-70.

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