Demand Uncertainty, Risk Aversion and the Labour‐Managed Firm
Abstract
This article examines the behaviour of a labour‐managed firm operating in a world in which the output price is uncertain, but it varies betwen a price floor and a price ceiling. We show that risk aversion is sufficient to give the direct relationship between a change in uncertainty and the optimal level of output for the labour‐managed firm, which is weaker than the decreasing absolute risk aversion assumption imposed by Hawawini and Michel (1979), Hey and Suckling (1980), Hey (1981a) and Paroush and Kahana (1980).
Citation
Wang, L.F.S. and Bowles, D. (1984), "Demand Uncertainty, Risk Aversion and the Labour‐Managed Firm", Journal of Economic Studies, Vol. 11 No. 1, pp. 49-54. https://doi.org/10.1108/eb002573
Publisher
:MCB UP Ltd
Copyright © 1984, MCB UP Limited