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Interest rate and output price uncertainty and industry equilibrium for non-renewable resource extracting firms
Author(s)
Date Issued
1988
Journal
ISSN
0165-0572
Citation
Resources and Energy, Mar. 1988, vol. 10(1), pp. 1-14.
Type
Peer Reviewed Journal Article
Abstract
We establish convexity of a risk-neutral non-renewable resource extracting agent's value function in the future interest rate, a random variable. A preference by the agent for future interest rate uncertainty follows. A rational expectations, m identical firm industry equilibrium is characterized and the links between interest rate uncertainty and output price uncertainty are investigated.
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