Commodity storage with durable shocks : A simple Markovian model
AbstractWe model an economy that alternates randomly between abundance and scarcity episodes. We develop an original method to characterize in detail the structure of the Markovian competitive equilibrium. Accumulation and drainage of stocks are the main focuses. Economically appealing comparative statics results are proved. We also characterize stationary distribution of states. We extend the model to discuss price stabilization policies, injection and release costs, and limited storage capacity. Overall, the analysis delineates the notion of "flexible economy".
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Bibliographic InfoPaper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/5384.
Date of creation: Sep 2013
Date of revision:
Publication status: Published in Mathematics and Financial Economics, 2013, Vol. 7, no. 4
Price stabilization; supply risk; strategic stocks;
Find related papers by JEL classification:
- L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-16 (All new papers)
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