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Commodity storage with durable shocks : A simple Markovian model

Listed author(s):
  • Anna Creti

    (UPOND - Université Paris Ouest Nanterre La Défense - IUT de Ville d'Avray)

  • Bertrand Villeneuve

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris-Dauphine)

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".

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File URL: https://hal.archives-ouvertes.fr/hal-01517436/document
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Paper provided by HAL in its series Post-Print with number hal-01517436.

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Date of creation: 2013
Publication status: Published in Mathematics and Financial Economics, 2013, 7 (4), pp.32. <10.1007/s11579-013-0108-7>
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.archives-ouvertes.fr/hal-01517436
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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