Storage and security of supply in the medium run
AbstractThis paper analyzes the role of private storage in a market for a commodity (e.g. natural gas) whose supply is subject to the threat of an irreversible disruption. We focus on the medium term in which seasonality of demand and exhaustibility can be neglected. We characterize the price and inventory dynamics (accumulation, drainage and limit stocks) in a competitive equilibrium with rational expectations. We show the robustness of our results to alternative scenarios in which either a disruption has finite duration or the crisis is foreseen. During the crisis consumers may put pressure on the Government to intervene, but too severe antispeculative measures would inefficiently discourage storage. Practical solutions to this dilemma cause welfare losses that we characterize and quantify.
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Bibliographic InfoArticle provided by Elsevier in its journal Resource and Energy Economics.
Volume (Year): 31 (2009)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/inca/505569
Gas industry Storage Dynamic models;
Other versions of this item:
- Chaton, Corinne & Creti, Anna & Villeneuve, Bertrand, 2009. "Storage and security of supply in the medium run," Economics Papers from University Paris Dauphine 123456789/5204, Paris Dauphine University.
- Chaton, Corinne & Creti, Anna & Villeneuve, Bertrand, 2008. "Storage and Security of Supply in the Medium Run," MPRA Paper 11986, University Library of Munich, Germany.
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