Input Price Uncertainty and Factor Demand

S. Devadoss, E. Kwan Choi
June 1987  [87-WP 25]

A simple two-input and one-output model is used to examine the effects of variable input price uncertainty on a quasi-fixed factor. These theoretical results, applied to a livestock firm, indicate that choice of the quasi-fixed factor depends upon the attitude of the farmer toward risk and whether the inputs are complements, substitutes, or independents.

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