%0 Journal Article
%T Price Instability, Risk, and Storage: Revisited
%A Andrew Schmitz
%A Sheikh Jafar Emran
%J Theoretical Economics Letters
%P 203-210
%@ 2162-2086
%D 2024
%I Scientific Research Publishing
%R 10.4236/tel.2024.141011
%X 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 <a href=\"#ref21\">Schmitz &amp; Chegini
(Schmitz &amp; Chegini, 2020)</a>, <a href=\"#ref11\">Schmitz (Schmitz, 2021)</a>. 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.
%K Price Instability
%K Risk
%K Storage
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=131586