Equilibrium Storage in a Markov Economy
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."
|Date of creation:||11 Jan 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Williams,Jeffrey C. & Wright,Brian D., 2005.
"Storage and Commodity Markets,"
Cambridge University Press, number 9780521023399, June.
- Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October.
- Baldursson, Fridrik M & von der Fehr, N.-H.M.Nils-Henrik M, 2004. "Price volatility and risk exposure: on market-based environmental policy instruments," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 682-704, July.
- R. Edwards & C. P. Hallwood, 1980. "The Determination of Optimum Buffer Stock Intervention Rules," The Quarterly Journal of Economics, Oxford University Press, vol. 94(1), pages 151-166.
- Olivier ROUSSE & Benoît SEVI, 2006. "Banking behavior under uncertainty: Evidence from the US Sulfur Dioxide Emissions Allowance Trading Program," Cahiers du CREDEN (CREDEN Working Papers) 06.02.63, CREDEN (Centre de Recherche en Economie et Droit de l'Energie), Faculty of Economics, University of Montpellier 1.
- Angus Deaton & Guy Laroque, 1990.
"On The Behavior of Commodity Prices,"
NBER Working Papers
3439, National Bureau of Economic Research, Inc.
- Hallett, A. J. Hughes, 1984. "Optimal stockpiling in a high-risk commodity market the case of copper," Journal of Economic Dynamics and Control, Elsevier, vol. 8(2), pages 211-238, November.
- Chaton, Corinne & Creti, Anna & Villeneuve, Bertrand, 2008.
"Storage and Security of Supply in the Medium Run,"
11986, University Library of Munich, Germany.
- Dale A. Carlson & Anne M. Sholtz, 1994. "Designing Pollution Market Instruments: Cases Of Uncertainty," Contemporary Economic Policy, Western Economic Association International, vol. 12(4), pages 114-125, October.
- Bryan Routledge & Duane Seppi & Chester Spatt, .
"Equilibrium Forward Curves for Commodities,"
GSIA Working Papers
1997-50, Carnegie Mellon University, Tepper School of Business.
- Montero, Juan-Pablo, 1998. "Marketable pollution permits with uncertainty and transaction costs," Resource and Energy Economics, Elsevier, vol. 20(1), pages 27-50, March.
- Albert L. Nichols & Richard J. Zeckhauser, 1977. "Stockpiling Strategies and Cartel Prices," Bell Journal of Economics, The RAND Corporation, vol. 8(1), pages 66-96, Spring.
- James L. Sweeney, 1977. "Economics of Depletable Resources: Market Forces and Intertemporal Bias," Review of Economic Studies, Oxford University Press, vol. 44(1), pages 125-141.
- Vincent P. Crawford & Joel Sobel & Ichiro Takahashi, 1984. "Bargaining, Strategic Reserves, and International Trade in Exhaustible Resources," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(4), pages 472-480.
- repec:dau:papers:123456789/5204 is not listed on IDEAS
- Shaul Ben-David & David Brookshire & Stuart Burness & Michael McKee & Christian Schmidt, 2000. "Attitudes toward Risk and Compliance in Emission Permit Markets," Land Economics, University of Wisconsin Press, vol. 76(4), pages 590-600.
- repec:dau:papers:123456789/5383 is not listed on IDEAS
- Hennessy, David A. & Roosen, Jutta, 1999.
"Stochastic Pollution, Permits, and Merger Incentives,"
Journal of Environmental Economics and Management,
Elsevier, vol. 37(3), pages 211-232, May.
- Hennessy, David A. & Roosen, Jutta, 1999. "Stochastic Pollution, Permits, and Merger Incentives," Staff General Research Papers 1700, Iowa State University, Department of Economics.
- Stephen J. Turnovsky, 1974. "Price Expectations and the Welfare Gains from Price Stabilization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(4), pages 706-716.
- Bailey, Roy E & Chambers, Marcus J, 1994.
"A Theory of Commodity Price Fluctuations,"
Economics Discussion Papers
2772, University of Essex, Department of Economics.
- William W. Hogan, 1983. "Oil Stockpiling: Help Thy Neighbor," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 49-72.
- Turnovsky, Stephen J, 1976. "The Distribution of Welfare Gains from Price Stabilization: The Case of Multiplicative Disturbances," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(1), pages 133-48, February.
- Devarajan, Shantayanan & Weiner, Robert J., 1989. "Dynamic policy coordination: Stockpiling for energy security," Journal of Environmental Economics and Management, Elsevier, vol. 16(1), pages 9-22, January.
- Arye L. Hillman & Ngo Van Long, 1983. "Pricing and Depletion of an Exhaustible Resource When There is Anticipation of Trade Disruption," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 215-233.
- Peter Helmberger & Rob Weaver, 1977. "Welfare Implications of Commodity Storage under Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(4), pages 639-651.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:20520. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.