| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 10678326 | Applied Mathematics Letters | 2011 | 5 Pages |
Abstract
We develop a model of firm behavior in the presence of risk, resource constraints, and a cash flow constraint. Given imperfect capital markets, the producer confronts an uncertain cash flow. Utilizing chance constrained programming, we show that an increase in aversion to liquidity risk can cause an increased allocation to high-risk production alternatives. With a binding cash flow constraint, risk-averse firms appear to demonstrate risk-seeking behavior over losses and risk-averse behavior over gains.
Related Topics
Physical Sciences and Engineering
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Authors
Eric A. DeVuyst, Justin Garosi, Jiahong Wu,