ANALYZING THE EXPECTED PROFIT MARGIN UNDER STOCHASTIC FLUCTUATION IN OUTPUT PRICE

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AHMADIAN M.; MOTAFAKER AZAD M.A.

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Journal: Iranian Journal of Economic Research Year:2006 | Volume:8 | Issue:27 Page(s): 115-132

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Information Journal Paper

Title

ANALYZING THE EXPECTED PROFIT MARGIN UNDER STOCHASTIC FLUCTUATION IN OUTPUT PRICE

Author(s)

AHMADIAN M. | MOTAFAKER AZAD M.A. | Issue Writer Certificate

Keywords

STOCHASTIC OUTPUT DEMANDQ3

ABSOLUTE RISK AVERSIONQ3

PROCESSION EFFICIENCY COSTQ3

Abstract

This paper develops a theoretical setting in which firms within industry are risk averse and maximize expected utility of profit under output price uncertainty in an oligopolistic market. The expected profit margin is under influence of increase in market share and concentration coefficient at the firm and industry levels. This effect is decomposed of efficiency cost effect as measured by marginal processing cost reduction and the effect due to output price variance under uncertainty. Furthermore, the industry' conjectural elasticity is used as a parameter to evaluate the market's degree of competitiveness. The technique of pooling time-series and cross-section is applied for 11 sugar cane factories that are listed in Tehran Exchange market over the period 1375-1382. The findings indicate that the estimate of collusion parameter is lower and it increases with higher sugar price elasticity of demand. Furthermore, the effect of output price uncertainty offsets the cost efficiency effect resulted from market share and concentration.

Cites

THE STUDY OF INFLATION AND GLOBALIZATION EFFECT ON IRAN LARGE INDUSTIE'S PROFIT: COMBINATION OF SYSTEM AND ECONOMETRIC

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APA: Copy

AHMADIAN, M., & MOTAFAKER AZAD, M.A.. (2006). ANALYZING THE EXPECTED PROFIT MARGIN UNDER STOCHASTIC FLUCTUATION IN OUTPUT PRICE. IRANIAN ECONOMIC RESEARCH, 8(27), 115-132. SID. https://sid.ir/paper/2686/en

Vancouver: Copy

AHMADIAN M., MOTAFAKER AZAD M.A.. ANALYZING THE EXPECTED PROFIT MARGIN UNDER STOCHASTIC FLUCTUATION IN OUTPUT PRICE. IRANIAN ECONOMIC RESEARCH[Internet]. 2006;8(27):115-132. Available from: https://sid.ir/paper/2686/en

IEEE: Copy

M. AHMADIAN, and M.A. MOTAFAKER AZAD, “ANALYZING THE EXPECTED PROFIT MARGIN UNDER STOCHASTIC FLUCTUATION IN OUTPUT PRICE,” IRANIAN ECONOMIC RESEARCH, vol. 8, no. 27, pp. 115–132, 2006, [Online]. Available: https://sid.ir/paper/2686/en

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