Storage and Security of Supply in the Medium Run

Corinne Chaton, Anna Creti and Bertrand Villeneuve

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes the role of private storage in a market for a commodity (e.g. natural gas) whose supply is subject to the threat of an irreversible disruption. We focus on the medium term in which seasonality of demand and exhaustibility can be neglected. We characterize the price and inventory dynamics (accumulation, drainage and limit stocks) in a competitive equilibrium with rational expectations. We show the robustness of our results to alternative scenarios in which either a disruption has finite duration or the crisis is foreseen. During the crisis consumers may put pressure on the Government to intervene, but too severe antispeculative measures would inefficiently discourage storage. Practical solutions to this dilemma cause welfare losses that we characterize and quantify.

Keywords: Storage; Dynamic models; Gas industry (search for similar items in EconPapers)
JEL-codes: L95 L98 Q48 (search for similar items in EconPapers)
Date: 2008-07-23
New Economics Papers: this item is included in nep-cse and nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Storage and security of supply in the medium run (2009)
Working Paper: Storage and security of supply in the medium run (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:11986

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