TY - JOUR
T1 - Labour hoarding, price rigidity and the theory of imperfect competition under uncertain demand
AU - Toulemonde, E.
N1 - Copyright 2004 Elsevier Science B.V., Amsterdam. All rights reserved.
PY - 1999/1/1
Y1 - 1999/1/1
N2 - It is shown that a monopolistic firm under uncertainty may be inclined to keep some of its output unsold when demand is low. This gives rise to changes in conventional results. Under uncertainty, a risk-neutral monopolistic firm produces more than in a deterministic environment and it refuses to sell its total output when demand is low, because the marginal revenue could become negative or lower than the cost of selling the product. Moreover, in this framework, prices are shown to be more rigid downwards than upwards. The model also provides a new explanation for labour hoarding.
AB - It is shown that a monopolistic firm under uncertainty may be inclined to keep some of its output unsold when demand is low. This gives rise to changes in conventional results. Under uncertainty, a risk-neutral monopolistic firm produces more than in a deterministic environment and it refuses to sell its total output when demand is low, because the marginal revenue could become negative or lower than the cost of selling the product. Moreover, in this framework, prices are shown to be more rigid downwards than upwards. The model also provides a new explanation for labour hoarding.
UR - http://www.scopus.com/inward/record.url?scp=0033453403&partnerID=8YFLogxK
M3 - Article
AN - SCOPUS:0033453403
SN - 0347-0520
VL - 101
SP - 477
EP - 487
JO - Scandinavian Journal of Economics
JF - Scandinavian Journal of Economics
IS - 3
ER -