Please use this identifier to cite or link to this item:
http://hdl.handle.net/2123/7585
|
| Title: | A RISK AVERSE PRICE-SETTING MONOPOLIST IN A MODEL OF INTERNATIONAL TRADE |
| Authors: | Lahiri, Sajal Sheen, Jeffrey Economics |
| Issue Date: | Oct-1989 |
| Publisher: | Department of Economics |
| Series/Report no.: | 132 |
| Abstract: | We construct a partial equilibrium model of a risk averse monopolist who faces an uninsurable uncertain foreign demand and a constant marginal cost, and makes an ex-ante production plan, committing ex-post to the ex-ante price. Optimal government intervention is considered when the good is only exported and income risk aversion differs for the representative consumer and the monopolist. If both agents are not too risk averse, or are identically so, the government should not intervene. If either or both agents are sufficiently risk averse, we find that a production tax will be optimal when the monopolist is more risk averse than the consumer. There is also a sensible range of parameter values for which the government will be indifferent between taxing or subsidising the monopolist. If the good is consumed domestically, the normal monopoly distortion adds a force for a subsidy. |
| URI: | http://hdl.handle.net/2123/7585 |
| ISBN: | 0 949269 71 9 |
| Department/Unit/Centre: | Economics |
| Appears in Collections: | Working Papers - Economics |
Files in This Item:
|
Items in Sydney eScholarship Repository are protected by copyright, with all rights reserved, unless otherwise indicated.