Costs Function Optimization For Prevention Of Firm’s Industrial Risks With Regard To Reinvestment Of Profit

Abstract

We consider the problem of the firm’s cost function optimization to prevent the industrial risks (i.e., the voluntary risk costs), by the criterion of the total costs with regard to a reinvestment of the firm’s profit. In the paper the voluntary risk costs function of the firm in the perfect competition by the total costs criterion is optimized. The rational strategy of the firm’s risk management consists in a gradual increase of the costs to prevent the risk situations with the production volume growth. The voluntary risk costs function is determined for the power function of the production costs and the exponential decreasing function of the industrial damage for the firm in the perfect competition.