Information, Flexibility, and Value Added

David Hennessy and Bruce Babcock

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

Abstract: Information technologies used in production activities facilitate the acquisition of more detailed and more timely information concerning the state of the production environment. While the effects of distribution shifts on decisions under uncertainty have been much studied, less is known about the effects of information acquisition on revenue generation and choice. In this article we consider the firm level impacts of information acquisition on revenue, on input use, and on profitability. A choice made under uncertainty depends upon the distribution of a random parameter but not upon its realization, while the choice depends only on the realization when this realization is known. Impacts are determined by interactions between second and third cross derivatives of the primal revenue function.

Date: 1998-11-01
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Citations: View citations in EconPapers (8)

Published in Information Economics and Policy, November 1998, vol. 10, pp. 431-450

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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:1362

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