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Title:The Competitive Firm Under Price Uncertainty: The Role of Information and Hedging PDF Logo
Authors:Broll, Udo
Eckwert, Bernhard
Issue Date:2007
Series/Report no.:Dresden discussion paper in economics 12/07
Abstract:We study the impact of transparency in a commodity market on the decision problem of a competitive firm under price uncertainty and hedging opportunities. Market transparency is modeled by means of the informational content of publicly observable signals which are correlated with the random price. We find that the impact of more transparency on labor employment and production depends on the firm's technology. Inparticular, more transparency may result in lower average output even though on average more labor has been used in the production process. We also analyze the link between market transparency and the welfare of the firm.
Subjects:Transparency
information system
price uncertainty
hedging
competitive firm
JEL:L23
L25
L21
Document Type:Working Paper
Appears in Collections:Dresden Discussion Paper Series in Economics, Faculty of Business and Economics, TU Dresden

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