American Finance Association

A Portfolio Approach to Fossil Fuel Procurement in the Electric Utility Industry

Author(s): Dan Bar-Lev and Steven Katz
Source: The Journal of Finance, Vol. 31, No. 3 (Jun., 1976), pp. 933-947
Published by: Wiley for the American Finance Association
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THE JOURNAL

OF FINANCE

* VOL. XXXI, NO. 3

* JUNE 1976

A PORTFOLIO APPROACH TO FOSSIL FUEL

PROCUREMENT IN THE ELECTRIC UTILITY INDUSTRY
DAN BAR-LEVANDSTEVEN
KATZ*
RISINGCOSTSOF FUELinputs have greatly affected the operating performance of
the electric utility industry. Fuel is no longer cheap and abundant, but has become
a precious resource to be conserved and efficiently utilized. The purpose of this
study is to inject a novel approach to fossil fuel procurement, and to determine to
what extent the utility industry has been an efficient utilizer of scarce resources.
The implications of this study have relevance to the managers of the utility
industry, to the public regulatory commissions and to students of the industry.
Section I deals briefly with some of the characteristics of the industry and
indicates the relationship of portfolio theory to fossil fuel mix. Section II reviews
the methodology and data used in the study, while Section III contains the
empirical results and an analysis of them. A theoretical extension is introduced in
Section IV where the notion of the Capital Market Line as it applies to fuel
diversification is interpreted. Section V contains a summary and implications of the
paper.
I.

CHARACTERISTICS OF THE ELECTRIC UTILITY INDUSTRY

Utilities need fuel inputs to produce the steam which turns the turbine-generators.
In a conventional fossil fuel plant, fuel inputs are burned in boilers, while in a
nuclear reactor plant, a nuclear reactor substitutes for the boiler. Since the electric
utility industry is a price-sensitive fuel market, many steam-electric power plant
boilers are already equipped to burn more than one type of fuel and can readily
switch from one to another as shifting prices favor their selection. Furthermore,
most existing conventional steam plants can be equipped to utilize coal, oil, and
natural gas either singularly or in various combinations. This ability may be due
either to the original design of the boilers or to the installation of conversion
equipment.
Electric utilities require an assured long-range supply of fossil fuel, and therefore,
the electric utility companies generally sign long-term contracts of 10 to 20 years
covering about 70% to 80% of their expected needs. The rest is bought on a "spot
basis." These contracts usually contain features allowing price adjustments over the
duration of the contract for changes in production costs, transportation costs,
wage-rate increases, etc. The fuel quantities are generally flexible, however, due to
the contract terms or the ability of the electric utility company to sell a contract to
another buyer.
*Assistant Vice President, International Division, Tadiran Ltd., Haifa, Israel, and Assistant Professor
of Economics and Finance, Baruch College, CUNY, respectively. Our thanks to Professors Paul Grier
and Roger Mesznik of Baruch College, and to Professor Myron J. Gordon, University of Toronto, for
their suggestions in improving the quality of the paper.
933

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934

The Journal of Finance

If the electric utility companies would buy all their needed fuel on a spot basis
and not contract 70% to 80% of their required fuel, the whole problem of fuel
diversification would not exist. The utilities would buy the cheapest available fuel
as defined by "as burned" costs on a "spot basis" and would switch from one kind
of fuel to another each time there was a relative change in the "as burned" costs. In
such a situation, the only problem of the utility company would be to keep
informed of the cheapest available fossil fuel. However, since the utilities do sign
long-term contracts for fuels which contain price adjustment clauses, the companies must estimate the factors that might cause the prices of these fuels to go up
or down.
This situation brings an uncertainty factor to the decision making process of
buying fuels and is analogous to the problem of selecting risky securities. In buying
risky securities the problem is one of estimating the returns, risks, and correlations
of the securities, where the risk is defined as the standard deviation of the expected
return on the portfolio, and the goal is to maximize the return of the portfolio for a
given risk. Once the return-risk inputs for the various securities are determined, one
uses a quadratic programming approach to determine the loci of portfolios which
would maximize return for various levels of risk.' The choosing of which portfolio
to invest in is then a matter of personal preference where the trade-off is greater
risk for greater return. Similarly, in buying fossil fuels, the goal would be to
minimize both the expected cost of the fuel and its standard deviation, namely, the
risk.
By using Markowitz diversification, an efficient frontier of fuel mixes would be
generated for various combinations of cost and risk. The utility's management
would then choose that point on the frontier which minimizes its utility, trading off
cost for risk. In dealing with the problem of fuel diversification, we will assume that
the electric utility sector is composed of risk averting companies and that the utility
companies have loci of indifference curves between combination of risk and
expected return.
II.

METHODOLOGY AND DATA

In order to apply the Markowitz technique, expectations must be formed for the
following components.
1. E(r,)= expected cost of fuel i, i = 1,. ..,n
2. vii= the variance of cost ri, i = I,., n
3. ayj, ij =the covariance of costs between ri and rj for all pairs of fuels,
i= Il,...,In,j l.,n
Once the parameters have been obtained the efficient frontier can be determined
for various levels of costs, E*, by minimizing the Lagrangean function Z, where
Z=
and w =percentage

?E

n
wiwjwy + XI E wiE(ri)-E*

+X2

n
?E Wi)

of portfolio in fossil fuel i.

1. Harry Markowitz in a pioneering work (13) developed this approach to portfolio construction.

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Fuel Procurementin the Electric Utility Industry

935

The cost inputs used in our study are the "as burned" costs incurred in bringing
the fuel to its point of use. Included in the "as burned" costs are additional
overheads resulting from transportation expenses, the heating of oil lines to
improve atomization and flow characteristics, stock cleaning and fuel handling
facilities for coal, fuel storage and inventory costs for both coal and oil, and
maintenance. These costs are not readily identifiable and may vary among users.
However, they are reported by the utilities, and are published by the National Coal
Association on the basis of an average cost per million BTU (14). It is necessary to
consider these additional expenses incurred in the use of each fuel in order to
determine the relative costs to the users on a common basis.
For example, the cost of fuel at the point of use is greatly influenced by the
distance that it has to be transported. In the United States in 1969 average
transportation costs of natural gas delivered to distributors in Boston represented
95% of total expenses, while for New York they represented 60% (14). Because of
the disparity of "as burned" costs for the same fossil fuel in different sections of the
United States the country was divided into nine regions where within each region
the "as burned" cost experience is similar.2 The nine geographical regions are: 1)
New England 2) Middle Atlantic 3) East Coast Central 4) West South Central 5)
South Atlantic 6) East South Central 7) West South Central 8) Mountain and 9)
Pacific. (See Appendix I.)
Seventeen annual "as burned" costs C, for coal, oil, and gas for the 1952-1968
period for the nine different regions are determined, and transformed to l/cx
1000.3 The average of the actual 1969 and 1970 "as burned" costs were used as the
expected 1969 fuel costs. The minimum risk portfolios can now be determined for
various levels of transformed reciprocal "as burned" costs E* through solving the
following Lagrangian objective function.
Z=

Ewiwjy+1(X

EwiE(r)-E*)

+X2(wi-)

where aii= covariance (variance, if i =j) between fuels i and j.

E* = a specific level of return
wi=percentage of portfolio in fossil fuel i
E(r1)= expected value of reciprocal of "as burned" cost for fuel i.
The efficient frontier for 1969 was then constructed for each region, and
compared to the actual performance of the regional utilities to determine whether
the actual fuel diversification for each of the nine regions was near or on the
efficient frontier, or below it indicating that a better fuel diversification could have
been obtained by the utility companies.
Limitations of Data
It should be understood that the analysis is based on aggregate data for each
region. Therefore, if the actual fuel diversification of a specific region is in
2. We have used the regionalbreakdowndeterminedby the NationalCoal Associationwhichis based
on homogeneityof "as burned"costs. AppendixII contains the data inputs used in determiningthe
efficientfrontier.
3. The transformationln(l/c) was investigatedbut we found that l/c more closely resemblesthe
normaldistribution.

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936

The Journal of Finance

compliance with the calculated efficient frontier, this does not necessarily mean
that all the companies in that region optimized their fuel mix in accordance with
the portfolio approach. Similarly, if a region is inefficiently diversified, it is still
possible that one or two of the utilities servicing that region had an efficient fuel
mix. It should also be noted that because of possible imperfect supply markets,
problems might exist in obtaining all the fuel one wants at the prevailing prices.
Furthermore, existing contracts of various maturities have been left out of the
analysis. In fact, an extension of this study might be the evaluation of marginal
decisions given the existing contracts.
In fairness to the utilities, it must be recognized that they operate under a
number of legal, environmental, and political restraints which could obviate the
achievement of efficient fuel diversification from a Markowitz standpoint. Even
though costs of fuel constitute approximately 80% of their production expenses,
management may have, out of necessity, additional objectives beyond simply
minimizing fuel costs subject to a specific level of risk. To dampen the effect of
these secondary objectives and constraints, we analyze the performance of utilities
in 1969 before many of the problems which now beset them became important
considerations.
III.

EMPIRICAL RESULTS

Figures 1 through 9 show the efficient frontiers that could have been attained in
1969 for the nine different regions and the actual portfolio mix of fuels (A)
achieved by the regional utilities.
t1/C)P
29.01

28.01
27.01,
26.04

25.5e
1.7
1.6
1.8
FIGURE1-New England

2.5

percent accounted for by:

portfolio

coal

oil

Actual

30.6

69.3

gas
0.1
100.0

II

17.7

82.3

III

29.8

70.2

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( /C) p
30.5
30.0

29.5
29.0

II

1.7

1.5

2.1
1.9
Atlantic Region

FIGURE 2-Middle

percent accounted for by:

portfolio

coal

oil

gas

Actual

57.0

34.0

9.0

100.0

II

63.4

36.6

III

62.0

38.0
12

(1/C)P1
35,

30

25
20

1.2

1.4

FIGURE 3-East

1.8
1.6
North Central

percent accounted for by:

portfolio

coal

Actual

93.0

100.0

II

79.0

III

25.4

oil

gas
7.0

21.0

74.6

937

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( /C)p A
40.0
39.0
38.0
*A
37.0

0.5

1.0

1.5

FIGURE 4 -West

2.0 2.5 3.0

North Central

percent accounted for by:

portfolio

coal

oil

gas

Actual

54.7

2.0

43.3

(1 /C)p,

100.0

II

62.6

37.4

III

63.2

36.8

32.2

31.9

31.6
I

31.3

1.0

1.5

FIGURE 5-South

2.0
2.5
Atlantic

percent accounted for by:

portfolio

coal

oil

gas

Actual

71.3

15.7

13.0

100.0

II

17.7

III

88.0

82.3
12.0

938

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( /C) pi
45
44

i.

42

40
38

1.35

1.45 1.55
1.65
6-East South Central
percent accounted for by:

FIGURE

portfolio

coal

Actual

88.3

100.0

II

96.9

III

76.7

oil

gas
11.7

3.1
23.3

(1/C)p /\
50
*A

45
40

35
30
25

ii

1
FIGURE

20
15
10
5
7-West South Central

percent accounted for by:

portfolio

coal

Actual

oil

gas

100.0
100.0

II

99.0

III

100.0

1.0
-

939

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( /C)p /
48,

46
44

42
404

0.5 1.0
FIGURE

2.0
4.0
3.0
8-Mountain Region

percent accounted for by:

coal

portfolio
Actual

44.0

100.0

II

79.7

III

29.3

oil

gas

3.5

52.5

20.3
70.7

(_/c _)

31
30
29

28

3.5

4.5

FIGURE

6.5
5.5
9-Pacific

>

percent accounted for by:

portolio

coal

Actual

oil

gas

18.4

81.6

II

91.2

III

100.0

100.0
8.8

940

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Fuel Procurementin the Electric Utility Industry

941

In three of the nine regions (South Atlantic, West South Central and Pacific), the
actual fuel mix lies on the efficient frontier. The other six regions fall below their
respective efficient frontiers, but to determine the extent of the shortfall we apply a
measure to the results similar to Sharpe's (16) ex-post measure of performance.
Y-RF
where Y= average realized yield over n prior periods
RF= Return of risk-free investment
cy = Standard deviation of realized yield over prior periods.
However, in the fuel diversification case, we assume that RF= 0 and our measure of
performance will be
,.,

ai=(l/C)1
(1/IC)1

where 1/C is the reciprocal of the "as burned" cost and al/c is the standard
deviation of 1/ C.
For each one of the nine geographical regions, we calculate three values: one for
point A, the actual fuel diversification of 1969; one for point B which is a vertical
point on the efficient frontier that lies above point A, and one for point C, which is
a horizontal point on the efficient frontier that lies to the left of point A. The
illustration of these points is presented in Figure 10.
After calculating the Zi values for the A, B and C fuel portfolios, we have to
calculate two ratios for each region. The first one is
qa=
q

ZA = (1/ C)A
.

ZB

AA

CB

(1/C)B

(1/C)A

(/C)B

where 0< q < 1 will measure the performance of a utility region vs. the highest
"return" that could be achieved for the same risk. The greater the ratio, the better
the actual fuel diversification performance. The second ratio is
X,=

ZA

=y

ZC

/ C)A

AA

*=

AC

AC

(I / C)CaA

where 0 < q < 1 will measure the relative horizontal distance between point A and
C. From this measurement, we can discover what risk can be eliminated and still
achieve the same "return," namely 1/ c. Again, the greater the ratio q, the better
the actual performance.
The results presented in Table 1 are striking. In seven of the nine regions, the q*
values are 0.97 or larger, and in the remaining two regions-region I and VIII-the
qi values are 0.88 and 0.87. This suggests that in almost all instances, the regional
utilities bought the cheapest fuel mix possible for a given level of risk, Looking at
the qj ratios, we see that in five regions the ratios are greater than 0.94, and in the
other four regions (region I, II, IV and VIII) these values are substantially smaller.
These figures indicate that the utilities in the four particular regions would have
been able to substantially reduce their risk and still have paid the same price for
their fuel mix.

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942

The Journal of Finance

FIGURE

10

The actual fuel diversification results for eight of the nine regions tend toward
the upper right side of the efficient frontier suggesting that the electric utility
companies preferred fuel diversifications composed of a relatively high "return"
and risk; that is, the utilities are prepared to enter into contracts with a high degree
of potential variability in price as long as the current price of the fuel is relatively
inexpensive.4 These results suggest that the indifference curves of the utilities are
relatively flat meaning that for each unit of return the companies agree to take a
relatively high degree of risk.
One possible reason for this nonconservative behavior of the utilities is the direct
result of the price regulated environment which the electric utility companies have
to face. Once the prices for utility services are set by the public service commissions, they remain at fixed levels until they are officially increased or decreased
4. Region V, the South Atlantic States is the only exception, in that its portfolio mix falls on the lower
left side of the efficient frontier.

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Fuel Procurementin the Electric Utility Industry

943

TABLE 1
FUEL DIVERSIFICATION
PERFORMANCES

Point A
Region
No.

ZA/ZB

= ZA/ZC

ZA

ZB

ZC

(1/C)A

Point B
AA

(1/C)B

Point C

0)B

(1/C)C

AC

0.88

0.64

10.2

11.6

15.9

25.5

2.5

29.0

2.5

25.5

1.6

II

0.97

0.95

14.6

15.1 15.4

29.3

2.0

30.2

2.0

29.3

1.9

III

0.98

19.4

19.7 23.3

34.9

1.8

35.4

1.8

35.0

1.5

IV

0.97

0.31

28.9

29.8

94.0

37.6

1.3

38.8

1.3

37.6

0.4

1.0

1.0

19.6

19.6 19.6

31.4

1.6

31.4

1.6

31.4

1.6

VI

0.99

0.94

27.7

28.0 29.5

44.3

1.6

44.9

1.6

44.3

1.5

VII

1.0

1.0

2.4

2.4

48.1

19.9

48.1

19.9

48.1

19.9

VIII

0.87

0.24

11.5

13.2 47.2

42.5

3.7

48.9

3.7

42.5

0.9

IX

1.0

1.0

5.4

30.8

5.7

30.8

5.7

30.8

5.7

83.2

2.4

5.4

5.4

by the regulatory agencies. A utility company is not free to vary the prices of its
services independently, but the utility has to go to the regulatory commission to ask
for a rate increase. Such a request will generally prompt a rather lengthly public
hearing during which recent company operating experience is reviewed. Testimony
from interested parties will be taken, and a decision concerning the size of the rate
increase will be then decided (12). Given this environment of price regulation, it
seems reasonable to assume that the utilities will receive a more favorable hearing
if they can show the public regulatory authorities that they bought a cheap mix of
fuels. In fact, we assume that the regulatory authorities, when evaluating the
efficiency and the performance of the utilities, place little emphasis on the ex-post
risk and stress the ex-post "return" instead, namely, 1/C. As a result of such
performance evaluation, the regulatory authorities cause the electric utility sector to
behave in a risk manner where traditionally this sector is considered to be
conservative. If the regulatory commissions would change their way of evaluation
and give more emphasis to ex-post risk, then the utilities would behave in a more
conservative fashion.
IV.

THE CAPITAL MARKET LINE AND FUEL DIVERSIFICATION

In portfolio theory, if we allow the investor the opportunity to include in his

portfolio a riskless asset (lending money but not borrowing it, at the pure rate of
interest5) whose expected rate of return is RF and whose standard deviation is zero,
we arrive at an efficient frontier represented by RFR*A in Figure 1.
5. We do not include in our portfolio presentation the possiblility of borrowing money, because it
does not have a meaningful interpretation.

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The Journal of Finance

944

FIGURE

11. Combinationof RisklessSecurityand Risky Securities

The portfolio represented by Point R* is particularly important since any point

on the efficient (linear) frontier between points RF and R* can be obtained by a
combination of risk free assets (point RF and investment in a risky portfolio R*).
Assuming that the investor's set of indifference curves is as shown in Figure 5, then
the combining of a riskless security in the portfolio would have improved the
investor's position. Specifically, he could reach a higher indifference curve, and
thus attain a greater utility.
An analogous approach can be used in fuel diversification where RF would
represent the reciprocal of a fixed fuel price and R* would be the market mix of
fuels. It could benefit a utility company to sign a contract to obtain a specific kind
of fuel and pay an even higher price for that fuel than that which prevails in the
market. This situation is advantageous when the fuel price is fixed and not subject

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Fuel Procurementin the Electric Utility Industry

945

to changes. By paying more for the fuel and eliminating the uncertainty factor
about the fuel prices, namely reducing the variance of the fuel prices to zero, the
company could shift the lower part of the efficient frontier to the left. The resulting
graph would become partially linear, raising the efficient frontier and allowing the
utility to further minimize its fuel costs.
Region five, the South Atlantic States represented in Figure 5 clearly illustrates
this point. With the smallest 1/ C ratio of 30.22, gas is the most expensive fuel. Gas
has also the largest variance 45.06 versus 5.59 and 2.55 for oil and coal, respectively. This fact would explain why a relatively small quantity of gas, 12%to 13%,
entered both the theoretical efficient frontier and the actual fuel mix (tangency of Ii
and the efficient frontier). However, assuming that the companies could have
signed a gas contract with a fixed price, even though this price would have been
higher than the then prevailing gas price, the utilities could have improved their
situation by moving to a higher indifference curve, thereby increasing the gas share
in their fuel mix (I2 in Figure 5). Of course, this alternative is worthwhile only in a
case where the preference of the company is such that its actual fuel diversification
point does not overly favor the upper right side of the efficient frontier. In the
situation presented in Figure 3, for example, the actual fuel mix is on the edge of
the upper right side of the efficient frontier. This indicates that the company's
indifference curve set is probably similar to that presented in Figure 3. In such a
case, the line which originates from the vertical axis and tangent to the efficient
frontier, will not be tangent to any higher indifference curve which means that the
companies could not move to an indiffernce curve higher than I2 and could not
improve their positions.
V.

SUMMARY AND CONCLUSIONS

The electric utility companies face the problem of optimizing their fossil fuel mix.
By applying a portfolio approach on a regional basis, the efficient frontier of fossil
fuel mix was determined and compared to the actual operating experience of the
electric utilities. The results show that generally the utilities efficiently diversified;
however, their portfolios are characterized by a relatively high rate of return and
risk. Furthermore, it is suggested that the regulatory climate causes the utilities to
behave in a risky fashion. The notion of a fossil fuel Capital Market line is
introduced, and the inference is drawn that under certain circumstances utilities
could move to a higher efficient frontier by purchasing a fuel at a higher cost than
the going rate, but with no possible fluctuation in future price.
APPENDIX I.-REGIONAL

COMPOSITION

The composition of the nine regions is based on relatively homogeneous cost

experience as determined by the National Coal Association. The breakdown is as
follows:
a. New England: Maine, New Hampshire, Vermont, Massachusetts, Rhode
Island and Connecticut.
b. Middle Atlantic Region: New Jersey, New York, and Pennsylvania.
c. East North Central: Illinois, Indiana, Michigan, Ohio and Wisconsin.

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The Journal of Finance

d. West North Central: Iowa, Kansas, Minnesota, Missouri, Nebraska, North

Dakota and South Dakota.
e. South Atlantic: Delaware, District of Columbia, Florida, Georgia, Maryland,
North Carolina, South Carolina, Virginia and West Virginia.
f. East South Central: Alabama, Kentucky, Mississippi and Tennessee.
g. West South Central: Arkansas, Louisiana, Oklahoma, and Texas.
h. Mountain Region: Arizona, Colorado, Montana, Nevada, New Mexico, Utah
and Wyoming.
i. Pacific: California, Oregon and Washington.
APPENDIX II

The inputs used in constructing the efficient frontiers in 1969 on a regional basis
are the actual average 1969-1970 costs for coal, oil, and gas and the variancecovariance matrics of these fuels based on actual prices during the 1952-1968
period.
REGION I-NEW

l/c*

Coal

Oil

Gas

25.38

32.43

29.4

ENGLAND
Variance-Covariance Matrix**
3
1
2
1
2
3

REGION II-MIDDLE

1/c

Coal

Oil

Gas

30.51

27.31

27.09

2.9030
4.1007
2.1709

4.1007
8,9602
4.9118

2.1709
4.9118
2.9585

ATLANTIC*
Variance-Covariance Matrix
3
1
2

1
2
3

4.9119
4.6065
-0.9289

4.6065
6.4669
- 1.0242

-0.9289
- 1.0242
7.9585

REGION III-EAST NORTH CENTRAL

1/c

Coal

Oil

Gas

35.38

16.87

29.29

Variance-Covariance Matrix
3
1
2
1
2
3

3.2681
0.3456
- 3.6498

0.3456
2.2114
2.9872

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- 3.6498
2.9872
20.4236

947

Fuel Procurementin the Electric Utility Industry

REGION IV-WEST NORTH CENTRAL*

1/c

Coal

Oil

Gas

36.81

18.12

39.61

Variance-Covariance Matrix
1
2
3
1
2
3

REGION V-SOUTH

1/c

Coal

Oil

Gas

31.45

32.11

30.22

2.2074
-2.5567
-3.2205

-2.5567
18.2441
6.1915

-3.2205
6.1915
5.9187

ATLANTIC
Variance-Covariance Matrix
2
3
1

1
2
3

2.5557
2.4902
-5.0361

2.4902
5.5900
-1.6273

-5.0361
- 1.6273
45.0623

* I/c is defined as 1000/cents per million b.t.u.

** 1 is coal, 2 is oil, 3 is gas

REFERENCES
1. American Gas Association Rate Committee. "Gas Rate Fundamentals," 1969.
2. Chemical Engineering Progress, April 1972.
3. E. Fama. "Risk, Return and Equilibrium: Some Clarifying Comments," The Journal of Finance,
March 1968.
4. Federal Power Commission. "National Power Survey," 1964 and 1970.
5.
. "National Gas Supply and Demand 1971-1990," Staff Report No. 2, Bureau of Natural
Gas, Washington, D.C., February 1972.
. National Gas Survey, Attachment H, August 8, 1972.
6.
. Attachment B, July 13, 1972.
7.
. "Steam-Electric Plant Construction Costs and Annual Production Expenses," 1973.
8.
9. Federal Power Commission. "Opinion No. 622," June 28, 1972.
10. I. Friend and M. Blume. "Measurement of Portfolio Performance Under Uncertainty," The
American Economic Reveiw, September 1970.
11. International Petroleum Encyclopedia. 1972.
12. P. Jaskow. "The Determination of The Allowed Rate of Return in a Formal Regulatory Hearing,"
The Bell Journal of Economics and Management, Autumn 1972.
13. H. Markowitz. "Portfolio Selection," The Journal of Finance, March 1952.
14. National Coal Association. "Steam-Electric Plant Factors," various years.
15. A. Sandmo. "On the Theory of the Competitive Firm Under Price Uncertainty," The American
Economic Review, March 1971.
16. W. Sharpe. "Portfolio Theory and Capital Markets," McGraw-Hill New York, 1970.
17. J. Tobin. "Liquidity Preference and Behavior Toward Risk," Review of Economic Statistics,
February, 1958.
18. I. Walter. "International Economics, Theory and Policy." The Ronald Press Company, New York,
1968.

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