Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/306538 
Year of Publication: 
2024
Series/Report no.: 
Center for Mathematical Economics Working Papers No. 698
Publisher: 
Bielefeld University, Center for Mathematical Economics (IMW), Bielefeld
Abstract: 
Output uncertainty is a major concern for industries prone to exogenous, persistent and large fluctuations in output, such as agriculture, wind and solar power generation, while technology adoption aimed at mitigating output uncertainty can improve social welfare. This paper constructs a competitive market model with random output fluctuations to examine the scale of technology adoption at the long-term equilibrium and its comparison with the social optimum. We show that the First Welfare Theorem no longer holds in general, and depending on the characteristics of the demand function, the scale of technology adoption in the competitive market may be greater or less than the socially optimal scale.
Subjects: 
technology adoption
uncertainty mitigation
long-termequilibrium
non-optimal scale
JEL: 
D50
D61
D62
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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