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Consumer Storage Confronts Monopoly Power

Author

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  • Bhaskar, Venkataraman
  • Roketskiy, Nikita

Abstract

We study the steady state behavior of the market for a storable good where firms have monopoly power instantaneously, but compete against future sellers. Consumers have identical preferences, but differ in their willingness to pay due to differential inventory holdings. In a steady state, the optimal nonlinear tariffs chosen by the firms induce the constant distribution of private inventories. Identical consumers behave differently, shop infrequently and consume in a cyclical manner. The ability to store goods gives rise to inefficiency, but also allows consumers to retain some surplus.

Suggested Citation

  • Bhaskar, Venkataraman & Roketskiy, Nikita, 2024. "Consumer Storage Confronts Monopoly Power," CEPR Discussion Papers 19480, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:19480
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    File URL: https://cepr.org/publications/DP19480
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    Keywords

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    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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