The social welfare under stochastic demand
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Authors
Cang, Ngyuen Minh
Subjects
Social welfare model
Advisors
Carrick, Paul M.
Date of Issue
1975-09
Date
September 1975
Publisher
Language
en_US
Abstract
The purpose of this paper is to continue to develop the social welfare model of Brown and Johnson (The American Economic Review, March, 1969, page. 119). We introduce a normal distribution (u,o(2)) with mean u, variance o(2) as the characterization of the risk that additively enters the product demand function facing the firm. The optional price still equals the short run marginal operating cost. We observe the optimal output when the mean or variance of risk increases, using the least-square method we estimate the linear relation between the optimal output and mean or variance of risk. In the second model we introduce the expected monopoly profit and observe how both the optimal price and output vary as the mean or variance of risk changes. As the final step, we compare the results of two kinds of models, and find that which the least affected by risk.
Type
Thesis
Description
Series/Report No
Department
Department of Operations Research and Administrative Sciences
Organization
Naval Postgraduate School (U.S.)
Identifiers
NPS Report Number
Sponsors
Funder
Format
Citation
Distribution Statement
Approved for public release; distribution is unlimited.
Rights
This publication is a work of the U.S. Government as defined in Title 17, United States Code, Section 101. Copyright protection is not available for this work in the United States.