Welfare Implications of Commodity Storage under Uncertainty
1977
Helmberger, Peter | Weaver, Rob
Intertemporal equilibrium is determined for a competitive market when private inventories are held. Production and storage decisions respond to rational expectations of uncertain prices. Algebraic expressions for gains (losses) to buyers and producers are derived in this context. Competitive equilibrium maximizes gains to society. Government programs that stabilize price either completely or partially generate benefits to producers and losses to buyers relative to competitive equilibrium. Welfare effects are quantified assuming an initial period of abundance and various supply and demand elasticities.
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