Optimal monopolistic strategy under demand uncertainty (Q1075240)

A set of optimal rules is derived for monopolistic firms, when there is parametric uncertainty in the demand function, inventories are held and there is risk aversion. It is shown by a set of price quantity models that the optimality of a particular mode of behavior, e.g., price policy, quantity control or a mixture of the two is affected by the treatment given to inventories and the degree of risk aversion. The specific situations where a hybrid policy of optimal price-cum-output is more appropriate are discussed in some detail in terms of suitable mathematical models.