Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10474482 | Journal of Economic Theory | 2005 | 25 Pages |
Abstract
This paper investigates an extension of the GEI-unawareness framework by Modica et al. (Econ. Theory 12 (1998) 259) to economies with entrepreneurial production. Existence of equilibrium is guaranteed given decreasing returns to scale. Firm's value and investment decision in equilibrium are characterized. An example of commodity innovation shows that the effect of different degrees of awareness on investment decisions depend upon the degree of risk aversion. In the case of log preferences unawareness may not matter for commodity innovation, although this depends on other preference features.
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Enrique Kawamura,