In a dynamic storable good market where demand changes over time, we investigate the producer's strategic incentives to hold inventories in response to the possibility of buyer stockpiling. The literature on storable goods has demonstrated that buyer stockpiling in anticipation of higher future prices harms the producer's profitability, particularly when the producer cannot commit to future prices. We show that the producer's inventories act as a strategic device to mitigate the loss from the lack of commitment. Our results provide a rationale for the producer's inventory behavior that sheds new light on the well-documented empirical evidence about inventories.

(2019). Strategic inventories under limited commitment [journal article - articolo]. In RAND JOURNAL OF ECONOMICS. Retrieved from http://hdl.handle.net/10446/144085

Strategic inventories under limited commitment

Fiocco, Raffaele
2019-01-01

Abstract

In a dynamic storable good market where demand changes over time, we investigate the producer's strategic incentives to hold inventories in response to the possibility of buyer stockpiling. The literature on storable goods has demonstrated that buyer stockpiling in anticipation of higher future prices harms the producer's profitability, particularly when the producer cannot commit to future prices. We show that the producer's inventories act as a strategic device to mitigate the loss from the lack of commitment. Our results provide a rationale for the producer's inventory behavior that sheds new light on the well-documented empirical evidence about inventories.
articolo
Antoniou, Fabio; Fiocco, Raffaele
(2019). Strategic inventories under limited commitment [journal article - articolo]. In RAND JOURNAL OF ECONOMICS. Retrieved from http://hdl.handle.net/10446/144085
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10446/144085
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