Flexibility in Intercommodity Substitution May Sharpen Price Fluctuations
Knut Anton Mork
The Quarterly Journal of Economics, 1985, vol. 100, issue 2, 447-463
Abstract:
Consider a competitive industry using an aggregate of two commodities as an input to production. Suppose that the supply of one of the commodities is stochastic. It can then be shown that investment in flexibility in the ex post choice among the two commodities is likely to result in a sharpening rather than dampening of the stochastic fluctuations in the aggregate commodity price if the supply elasticity is lower for the substitute commodity than for the one with stochastic supply. The paper derives this result and applies it to the case of ex post flexibility in fuel choice with uncertain fuel supply.
Date: 1985
References: Add references at CitEc
Citations:
Downloads: (external link)
http://hdl.handle.net/10.2307/1885390 (application/pdf)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:100:y:1985:i:2:p:447-463.
Ordering information: This journal article can be ordered from
https://academic.oup.com/journals
Access Statistics for this article
The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva
More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().