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Dual structures for the sole-proprietorship firm

Author

Listed:
  • Robert G. Chambers

    (Dept of Agricultural and Resource Economics, University of Maryland, College Park)

  • John Quiggin

    (Department of Economics, University of Queensland)

Abstract

This paper presents a dual representation of firm-level and market-level equilibrium behavior for a sole proprietorship economy with competitive and frictionless financial markets and stochastic production opportunities in a two-period setting. The dual equilibrium model is used to state conditions for the firms' production choices to be independent of their risk preferences in equilibrium. These conditions entail Pareto optimality, but do not require either that the firm's consumption choices lie within the span of financial markets or the assumption of an extreme version of linear risk tolerance.

Suggested Citation

  • Robert G. Chambers & John Quiggin, 2003. "Dual structures for the sole-proprietorship firm," Risk & Uncertainty Working Papers WPR03_6, Risk and Sustainable Management Group, University of Queensland.
    • Handle: RePEc:rsm:riskun:r03_6
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    File URL: http://www.uq.edu.au/rsmg/WP/WPR03_6.pdf
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    Cited by:

    1. Chambers, Robert G. & Quiggin, John, 2008. "Narrowing the no-arbitrage bounds," Journal of Mathematical Economics, Elsevier, vol. 44(1), pages 1-14, January.

    More about this item

    Keywords

    state-contingent production;

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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