Speculation on primary commodities: The effects of restricted entry

We present a model of oligopolistic commodity speculation, in which a limit ed number of speculators practice non-cooperative storage in an infinite-ho rizon game. A significant technical difficulty due to the non-negative stoc k constraint is overcome, and a tractable sub-game perfect equilibrium is p resented, in which it is shown that less is stored and prices are more vola tile than under perfect competition. It turns out that a tax on consumption of the good would increase storage, stabilize prices, increase welfare and raise speculative profits; the oligopolists would thus lobby for a tariff raised against their own shipments.