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https://doi.org/10.1016/S0304-3878(96)00412-9

has been cited by the following article:

• TITLE: Price Instability, Risk, and Storage: Revisited

  AUTHORS: Andrew Schmitz, Sheikh Jafar Emran

  KEYWORDS: Price Instability, Risk, Storage

  JOURNAL NAME: Theoretical Economics Letters, Vol.14 No.1, February 29, 2024

  ABSTRACT: This paper considers the case where price instability is brought about by demand shocks where unlike most of the earlier literature it was due to sup-ply instability. The results are based on a classical welfare economics framework as this is the case for much of the analysis on price instability. Our conclusions are very different from those derived from the earlier liter-ature that includes the recent work by Schmitz & Chegini (Schmitz & Chegini, 2020), Schmitz (Schmitz, 2021). We show that there can be a net gain from price instability. Given that both consumers and producers prefer price in-stability, there is no need for storage. Hence, storage leads to a second-best situation. The debate over whether the private or public sector should engage in storage does not arise. Our results clearly show that the net cost and bene-fits from a stabilization policy critically depend on the nature of the price in-stability.