Definition of 'More Systematic Risk' With Some Welfare Implications, A

David Hennessy and Harvey Lapan

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Producers are subject to similar production risks, and so their outputs are likely correlated. Using the entire data-set rather than summary statistics, we study an ordinal definition of systematic risk. For risk-neutral producers in perfect competition, we trace the effects of an increase in systematic risk through to impacts on welfare measures and production decisions. Expected welfare falls under more systematic risk, but either of expected producer surplus or expected consumer surplus may rise. Our definition of systematic risk also has relevance for the incentive to incur R&D expenditures, the benefits of diversity and the gains from risk-sharing.

Date: 2003-08-01
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Published in Economica, August 2003, vol. 70 no. 279, pp. 493-507

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:isu:genres:10110

Access Statistics for this paper

More papers in Staff General Research Papers Archive from Iowa State University, Department of Economics Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070. Contact information at EDIRC.
Bibliographic data for series maintained by Curtis Balmer ().