Inventories in a Competitive Environment
AbstractTrade is sequential: buyers arrive in batches and each batch completes trade before the next arrives. Producers allocate the available supply among all potential batches of buyers. Inventories accumulate whenever a batch does not arrive. Shocks to cost and demand are serially independent. There is a stationary relationship between inventories and prices with the following properties. Larger beginning-of-period inventories tend to depress prices. Inventories are positively serially correlated. A unit increase in inventories leads to an increase in the price spread. Output tends to vary more than sales. Copyright 1993 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 101 (1993)
Issue (Month): 5 (October)
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