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Abstract
The purpose of this article is to characterize the effect of a competitive price change on a
producer’s commodity transactions under uncertainty and impatience. The novelty comes from a
methodological approach inspired by both Slutsky and Arrow-Pratt. Combining and generalizing these
methodological frameworks illuminates natural analogues between production and consumption with and
without uncertainty, while facilitating the analysis of certain, risky, and uncertain choice within a consistent framework. Contributions include (i) the introduction of the immediate profit function — a generalization
of cost function to an economic environment with uncertainty and impatience, (ii) a generalization of
Arrow-Pratt risk aversion to characterize preferences over time as well as over uncertainty, (ii) a
generalization of Arrow-Pratt risk aversion to characterize technological and market uncertainty, (iv) the
decomposition of price effects on commodity choices with uncertainty and impatience using Slutsky
substitution and income effects, and the generalized Arrow-Pratt characterizations of uncertainty aversion,
patience aversion, technological uncertainty and market uncertainty; and (v) a reexamination of Sandmo’s
seminal comparative static analysis of a producer facing price risk in the context of price uncertainty and
impatience.