Competitive Industry Equilibrium under Uncertainty and Free Entry

Jean-Paul Chavas (), Rulon D Pope and Howard Leathers

Economic Inquiry, 1988, vol. 26, issue 2, 331-44

Abstract: 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.

Date: 1988
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