Input Demand Under Joint Energy and Output Prices Uncertainties

Moawia Alghalith (), Xu Guo (), Cuizhen Niu and Wing-Keung Wong
Additional contact information
Moawia Alghalith: Department of Economics, UWI, St. Augustine, Trinidad
Cuizhen Niu: School of Statistics, Beijing Normal University, No. 19 Xinjiekou Wai Street, Haidian District, Beijing, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2017, vol. 34, issue 04, 1-12

Abstract: In this paper, we analyze the impacts of joint energy and output prices uncertainties on the input demands in a mean–variance framework. We find that an increase in expected output price will surely cause the risk-averse firm to increase the input demand, while an increase in expected energy price will surely cause the risk-averse firm to decrease the demand for energy, but increase the demand for the non-risky inputs. Furthermore, we investigate the two cases with only uncertain energy price and only uncertain output price. In the case with only uncertain energy price, we find that the uncertain energy price has no impact on the demands for the non-risky inputs. We also show that the concepts of elasticity and decreasing absolute risk aversion (DARA) play an important role in the comparative statics analysis.

Keywords: Price uncertainty; mean–variance; energy price; risk; utility (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S021759591750018X
Access to full text is restricted to subscribers

Related works:
Working Paper: Input Demand under Joint Energy and Output Prices Uncertainties (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:apjorx:v:34:y:2017:i:04:n:s021759591750018x

Ordering information: This journal article can be ordered from

DOI: 10.1142/S021759591750018X

Access Statistics for this article

Asia-Pacific Journal of Operational Research (APJOR) is currently edited by Gongyun Zhao

More articles in Asia-Pacific Journal of Operational Research (APJOR) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().