Accession Number:

AD0738454

Title:

The Role of Prices in the Shifting and Trading of Risks.

Descriptive Note:

Technical rept.,

Corporate Author:

HARVARD UNIV CAMBRIDGE MASS

Personal Author(s):

Report Date:

1972-02-01

Pagination or Media Count:

32.0

Abstract:

The paper illustrates the economic mechanism through which multiple prices for the same commodity spread and shift risks. A combination of stochastic and nonstochastic prices will, if transactions occur at both prices, allow all production to be computed with the nonstochastic price. The trading and shifting of risks partially eliminates the risk constraint by a proliferation of prices. Firms in industries in which there are multiple prices are able to separate their risk-bearing and productive activities so it results in, or is the result of, large quantities of resources which are devoted solely to the trading and shifting of risks. Author

Subject Categories:

  • Economics and Cost Analysis
  • Operations Research

Distribution Statement:

APPROVED FOR PUBLIC RELEASE