Optimal hedging by firms with multiple sources of risky revenues

Itzhak Zilcha*, Udo Broll

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We study the hedging behavior of competitive risk-averse firms producing under price uncertainty and owning other sources of risky income as well. We show that the well-known 'Separation property' holds when a futures market for the commodity produced is available. However, unbiased futures market does not imply full-hedging by which the firm avoids price risk altogether.

Original languageEnglish
Pages (from-to)473-477
Number of pages5
JournalEconomics Letters
Issue number4
StatePublished - Aug 1992


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