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Market Power and Buffer Stocks

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  • PHIL SIMMONS
  • DALE STAHL

Abstract

The first‐order conditions for a monopolist inventory holder are found under more general conditions than previously. It is found that monopolist storers facing inelastic demand will carry over more stock than they would with competition unless the elasticity of demand b increasing as price decreases or is constant. The competitive stocks equilibrium is identified and found to be Pareto optimal and hence Sams' result that there will be no losers from a rent‐maximizing buffer stock policy is shown to be wrong.

Suggested Citation

  • Phil Simmons & Dale Stahl, 1992. "Market Power and Buffer Stocks," The Economic Record, The Economic Society of Australia, vol. 68(1), pages 1-6, March.
    • Handle: RePEc:bla:ecorec:v:68:y:1992:i:1:p:1-6
    DOI: 10.1111/j.1475-4932.1992.tb01744.x
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    References listed on IDEAS

    as
    1. Sarris, Alexander, 1982. "Export Taxes Versus Buffer Stocks as Optial Export Policies Under Uncertainty," CUDARE Working Papers 198218, University of California, Berkeley, Department of Agricultural and Resource Economics.
    2. Hart, Oliver D., 1975. "On the optimality of equilibrium when the market structure is incomplete," Journal of Economic Theory, Elsevier, vol. 11(3), pages 418-443, December.
    3. Sarris, Alexander H., 1982. "Export taxes versus buffer stocks as optimal export policies under uncertainty," Journal of Development Economics, Elsevier, vol. 11(2), pages 195-213, October.
    4. Newbery, David M, 1984. "Commodity Price Stabilization in Imperfect or Cartelized Markets," Econometrica, Econometric Society, vol. 52(3), pages 563-578, May.
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    Cited by:

    1. Wright, Brian D., 1993. "Dynamic Perspectives on Agricultural Policy Issues," CUDARE Working Papers 198632, University of California, Berkeley, Department of Agricultural and Resource Economics.

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