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Dual Approaches to State-Contingent Supply Response Systems under Price and Production Uncertainty

  • Robert G. Chambers
  • John Quiggin
Chapter
Part of the Natural Resource Management and Policy book series (NRMP, volume 23)

Abstract

Following a research direction originally set by Debreu (1959), Arrow (1953), Hirshleifer (1965), and Yaari (1969), Chambers and Quiggin (1992, 1996, 1997, 1998, 2000, 2001a, 2001b) and Quiggin and Chambers (1998a, 1998b, 2000) have studied the axiomatic foundations and theoretical applications of state-contingent production models. Among other results, they have shown that dual cost structures exist for state-contingent technologies and that these dual cost structures can be used to simplify the analysis of stochastic decision making. The guiding principle of their work was elucidated almost 50 years ago by Debreu. The state-contingent approach “allows one to obtain a theory of uncertainty free from any probability concept and formally identical with the theory of certainty.”

Keywords

Cost Function Risk Aversion Profit Function Certainty Equivalent Constant Relative Risk Aversion 
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Copyright information

© Springer Science+Business Media New York 2002

Authors and Affiliations

  • Robert G. Chambers
    • 1
    • 2
  • John Quiggin
    • 1
    • 2
  1. 1.University of MarylandUSA
  2. 2.Australian National UniversityAustralia

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