Optimal Production Under Uncertainty

Optimal Production Under Uncertainty

Title

Optimal Production Under Uncertainty

Authors

• Moawia Alghalith
  UWI, St Augustine
• Wing-Keung Wong
  Department of Finance, Quantum AI Research Center, Fintech & Blockchain Research Center, and Big Data Research Center, Asia University
  Department of Medical Research, China Medical University Hospital
  Business, Economic and Public Policy Research Centre, Hong Kong Shue Yan University
  The Economic Growth Centre, Nanyang Technological University

Abstract

To overcome long-standing obstacles in the literature about the current unusual and uncertain state of the world, in this paper, we generalize and extend the previous results of the theory of the competitive firm under uncertainty. In particular, we consider simultaneous output, output price, and input price and provide important comparative statics. We prove that the level of the risk is negatively related to optimal output, whereas the expected output price is positively related to optimal output. In addition, to relax the non-increasing absolute risk aversion assumption in the literature, our results do not require any restriction on the firm’s utility.

Keywords

Multiple uncertainties, comparative statics, risk, firm, risk aversion.

JEL Codes

D21, D24, D81

Pages

1-16

How to Cite

Alghalith, M., & Wong, W.-K. (2026). Optimal Production Under Uncertainty. The International Journal of Finance, 38, 1-16.