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.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
