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The Welfare Effects of the Introduction of Storage

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  • Brian D. Wright
  • Jeffrey C. Williams

Abstract

This paper examines the welfare effects of introducing storage into a market with stochastic supply in which all agents are competitive profit-maximizers with rational expectations. These welfare effects are the net result of the initial increase in demand for stock-building and the partial and asymmetric reduction in the dispersion of consumption brought about by storage. The distributional impacts depend crucially on the information available to producers before storage is introduced, the elasticity of supply, the specification of the consumption demand curve, and the cost of storage.

Suggested Citation

  • Brian D. Wright & Jeffrey C. Williams, 1984. "The Welfare Effects of the Introduction of Storage," The Quarterly Journal of Economics, Oxford University Press, vol. 99(1), pages 169-192.
  • Handle: RePEc:oup:qjecon:v:99:y:1984:i:1:p:169-192.
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    File URL: http://hdl.handle.net/10.2307/1885726
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