Inventories in a Competitive Environment

摘要: Trade is sequential: Buyers arrive in batches, and each batch completes trade before the next arrives. Producers allocate available supply among all potential batches of buyers. Inventories accumulate whenever a does not arrive. Shocks to cost demand are serially independent. There stationary relationship between inventories prices with following properties. Larger beginning-of-period tend depress prices. positively correlated. A unit increase reduces output by less than one unit. An leads an price spread. Output tends vary more sales.