Dual structures for the sole-proprietorship firm

This paper presents a dual representation of firm-level and market-level equilibrium behavior for a sole proprietorship economy with competitive and frictionless financial markets and stochastic production opportunities in a two-period setting. The dual equilibrium model is used to state conditions for the firms' production choices to be independent of their risk preferences in equilibrium. These conditions entail Pareto optimality, but do not require either that the firm's consumption choices lie within the span of financial markets or the assumption of an extreme version of linear risk tolerance.


Issue Date:
Dec 10 2003
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/150352
Total Pages:
33
JEL Codes:
D81
Series Statement:
Risk and Uncertainty Program
6/R03




 Record created 2017-04-01, last modified 2017-08-27

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