2001
Price or Quantity Setting Under Uncertain Demand and Capacity Constraints: an examination of the profits
Publication
Publication
Journal of Economics/ Zeitschrift fur Nationalokonomie p. 157- 171
This article considers price formation and quantity setting of a capacity-constrained risk-neutral firm facing uncertain demand. It is shown that the optimal price of a price-setting risk,neutral monopolist decreases with demand uncertainty. With a strictly convex demand function expected profits increase with uncertainty for a quantity,setting monopolist whereas expected profits decrease for a price-setting monopolist. Furthermore, similar results on the effect of uncertainty are derived for a differentiated goods industry
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hdl.handle.net/1765/12077 | |
Journal of Economics/ Zeitschrift fur Nationalokonomie | |
Organisation | Erasmus School of Economics |
Pennings, E. (2001). Price or Quantity Setting Under Uncertain Demand and Capacity Constraints: an examination of the profits. Journal of Economics/ Zeitschrift fur Nationalokonomie, 157–171. Retrieved from http://hdl.handle.net/1765/12077 |