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Commodity storage with durable shocks : A simple Markovian model

Author

Listed:
  • Anna Creti

    (IUT de Ville-d'Avray - UPN - Université Paris Nanterre)

  • Bertrand Villeneuve

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

Abstract

We 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".

Suggested Citation

  • Anna Creti & Bertrand Villeneuve, 2013. "Commodity storage with durable shocks : A simple Markovian model," Post-Print hal-01517436, HAL.
    • Handle: RePEc:hal:journl:hal-01517436
    DOI: 10.1007/s11579-013-0108-7
    Note: View the original document on HAL open archive server: https://hal.science/hal-01517436
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    References listed on IDEAS

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    2. Salant, Stephen W. & Yu, Xueying, 2016. "Forest loss, monetary compensation, and delayed re-planting: The effects of unpredictable land tenure in China," Journal of Environmental Economics and Management, Elsevier, vol. 78(C), pages 49-66.

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