A Theory of Continuous Uncertainty Types

Arbeitspapier

This paper distinguishes uncertainty types that differ continuously with respect to the degree to which uncertainty affects the optimal price/price markup or optimal quantity. A monopoly example is used to show that seemingly strong assumptions on functional forms can represent a wide variety of different scenarios, while (implicit) assumptions on continuous uncertainty types can lead to quite special results. Monopoly examples of the newsboy problem type are further used to show that the optimal capacity level and the optimal composition of capacity in terms of the number and size of production units depends crucially on the type of uncertainty and the employed functional forms for utilities and costs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 15-065/VIII

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Monopoly ; Information, Knowledge, and Uncertainty: General ; Transportation: General
• Subject: Continuous uncertainty types ; demand uncertainty ; cost uncertainty ; monopoly ; newsboy problem

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Czerny, Achim I. ; Verhoef, Erik T. ; Zhang, Anming
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/111740
• Last update: 10.03.2025, 11:41 AM CET