RISK-AVERSION AND PRICE RISK IN DUALITY MODELS OF PRODUCTION - A LINEAR MEAN-VARIANCE APPROACH

A duality model of production is developed that permits risk aversion and price uncertainty. The linear mean-variance framework employed is tractable for empirical research, in contrast to duality models of risk based on a generalized expected utility function. The framework is more general than in standard price certainty models while retaining the simplicity needed for empirical research.