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Exact Welfare Measurement for Producers under Uncertainty
Author(s) -
Larson Douglas M.
Publication year - 1988
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1241498
Subject(s) - ex ante , economics , production (economics) , welfare , risk aversion (psychology) , econometrics , decision maker , microeconomics , mathematical economics , expected utility hypothesis , management science , market economy , macroeconomics
Ex ante compensating and equivalent variations for producers under price or production uncertainty frequently can be obtained from properly specified ordinary ex ante output supply or input demand functions without assumptions about the decision maker's risk aversion. The Slutsky‐Hicks equations for several common empirical specifications of the production problem under uncertainty can be integrated to obtain the compensated supplies (demands) from observed ordinary supplies (demands). Closed‐form expressions for the exact welfare measures of parameter changes are derived for these cases.