Input Demand under Joint Energy and Output Prices Uncertainties
Xu Guo (),
Wing-Keung Wong () and
MPRA Paper from University Library of Munich, Germany
In this paper, we analyze the impacts of joint energy and output prices uncertainties on the inputs 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 inputs’ demand, while an increase in expected energy price will surely cause the risk averse firm to decrease the demand for energy and increase the demand for non-risky inputs. Further, increasing the variance of energy price will necessarily cause the risk averse firm to decrease the demands 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.
Keywords: Price Uncertainty; Mean-Variance; Energy price, Risk (search for similar items in EconPapers)
JEL-codes: C00 G11 (search for similar items in EconPapers)
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Journal Article: Input Demand Under Joint Energy and Output Prices Uncertainties (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52368
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