CONTRADICTORY PREDICTIONS ON SUPPLY RESPONSE UNDER STABILIZATION: A RECONCILIATION

Australian Journal of Agricultural Economics, 1991, vol. 35, issue 3, 10

Abstract: Two separate bodies of literature on stabilization give radically different results, yet these contradictions have not attracted any attention. The first arises from the neoclassical theory of stabilization and predicts that beneficial stabilization will always attract positive supply response. The second arises from the work of Newbery and Stiglitz and predicts 'perverse' supply response for highly risk averse producers. In this paper, the differences which yield these results are described and some suggestions are made for a generalized model.

Keywords: Risk; and; Uncertainty (search for similar items in EconPapers)
Date: 1991
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Journal Article: CONTRADICTORY PREDICTIONS ON SUPPLY RESPONSE UNDER STABILIZATION: A RECONCILIATION (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ajaeau:22619

DOI: 10.22004/ag.econ.22619

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