WHOLESALER MARKUP DECISIONS UNDER DEMAND UNCERTAINTY

We examine consistency with economic theory of markup decisions for a risk averse firm facing demand uncertainty. We derive testable comparative static results that describe the influence on the markup of expected demand, demand uncertainty, average variable costs and exogenous demand shifters. We test the model using data from the wholesale market for organic lettuce. Our results demonstrated that risk averse wholesalers raise markups as expected demand increases and reduce them as uncertainty increases.


Issue Date:
1996
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/16699
PURL Identifier:
http://purl.umn.edu/16699
Total Pages:
23
Series Statement:
Faculty Series 96-13




 Record created 2017-04-01, last modified 2019-08-26

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)