Open Access Journal Article

Optimal Commodity Storage: Privately and Publicly Financed Storage Compared

by Paul Hallwood a,* orcid
a
Department of Economics, University of Connecticut, Mansfield, USA
*
Author to whom correspondence should be addressed.
JEA  2023 2(1):17; https://doi.org/10.58567/jea02010004
Received: 12 February 2023 / Accepted: 28 February 2023 / Published Online: 1 March 2023
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Abstract

Consideration of optimal commodity storage with different discount rates. Finding that, even with a lower discount rate than private storage, optimal government-financed storage may not narrow price fluctuations compared with optimal privately financed storage because a government has to choose a probability of buffer stock failure greater than zero to economize on storage costs that could conceivably become very large. There is no presumption that government financed storage would be larger, with narrower intervention bands and more stable prices, than with privately-financed storage. The welfare enhancing effect of government financed storage compared to private storage is therefore indeterminate.

Keywords: Optimal commodity storage; Price stabilization; Private storage; Public storage; Storage costs;
Copyright: © 2023 by Hallwood. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY) (Creative Commons Attribution 4.0 International License). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
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ACS Style
Hallwood, P. Optimal Commodity Storage: Privately and Publicly Financed Storage Compared. Journal of Economic Analysis, 2023, 2, 17. https://doi.org/10.58567/jea02010004
AMA Style
Hallwood P. Optimal Commodity Storage: Privately and Publicly Financed Storage Compared. Journal of Economic Analysis; 2023, 2(1):17. https://doi.org/10.58567/jea02010004
Chicago/Turabian Style
Hallwood, Paul 2023. "Optimal Commodity Storage: Privately and Publicly Financed Storage Compared" Journal of Economic Analysis 2, no.1:17. https://doi.org/10.58567/jea02010004
APA style
Hallwood, P. (2023). Optimal Commodity Storage: Privately and Publicly Financed Storage Compared. Journal of Economic Analysis, 2(1), 17. https://doi.org/10.58567/jea02010004

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