The exclusion theorem under uncertainty: A review and generalization of recent contributions

Abstract.

This paper attempts to examine the validity of the exclusion theorem on a line under a stochastic environment in a more general context than prior studies. Our analysis shows that there are three key factors determining the intermediate or the corner location to be optimal; namely, including the type of uncertainty, the firm's attitude toward risk, and the convexity of the total transportation cost function. The main result is presented, and a comparison of our finding with those obtained by prior studies is then provided.