S-WoPEc
 
Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
The Economic Research Institute, Stockholm School of Economics SSE/EFI Working Paper Series in Economics and Finance

No 69:
Risk-Averse Firms in Oligopoly

Marcus Asplund

Abstract: Does risk aversion lead to softer or fiercer competition? To give a complete answer, I provide a framework that can accommodate a wide range of alternative assumptions regarding the nature of competition and types of uncertainty. I show how more risk aversion will influence a firm's best response strategies, and that competition is unambiguously softer only in case of marginal cost uncertainty. In contrast to risk neutrality, the best response strategies depend on the level of fixed costs. This fact is extended to cover strategic investment models, and to analyse the importance of accumulated profits. I conclude by a discussion of how it is possible to test for risk-averse behaviour in oligopoly by conditioning on the type of uncertainty.

Keywords: Oligopoly; risk aversion; fixed costs; strategic investment; second order stochastic dominance; background risk; market risk; (follow links to similar papers)

JEL-Codes: D43; D81; L13; L21; (follow links to similar papers)

35 pages, September 1995, Revised February 23, 2000

Previous title: Oligopoly and Risk Aversion

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

hastef0069.rev.pdf.zip    PDF-file (zipped) (214kB) 
hastef0069.rev.pdf    PDF-file (513kB) 
hastef0069.rev.ps.zip    PKZipped PostScript (253kB) 
hastef0069.rev.ps    PostScript file (1.18MB) 
Download Statistics
This paper is forthcoming as:
Asplund, Marcus, 'Risk-Averse Firms in Oligopoly', International Journal of Industrial Organization.



Questions (including download problems) about the papers in this series should be directed to Helena Lundin ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:hastef:0069 This page was generated on 2014-12-14 19:22:49