Inventory dynamics under transaction costs

Authors
Chavas, JP Despins, PM Fortenbery, TR
Citation
Jp. Chavas et al., Inventory dynamics under transaction costs, AM J AGR EC, 82(2), 2000, pp. 260-273
Citations number
27
Categorie Soggetti
Agriculture/Agronomy,Economics
Journal title
AMERICAN JOURNAL OF AGRICULTURAL ECONOMICS
ISSN journal
00029092 → ACNP
Volume
82
Issue
2
Year of publication
2000
Pages
260 - 273
Database
ISI
SICI code
0002-9092(200005)82:2<260:IDUTC>2.0.ZU;2-T
Abstract
A conceptual model of storage behavior is developed. Optimal intertemporal pricing is derived to analyze the effects of transaction costs on storage a nd arbitrage pricing. It is shown how transaction costs can rationalize the existence of an inverse carrying charge lot inventory. The model is applie d to U.S. soybeans stocks for the period 1960-95. The empirical results sug gest that transaction costs have a significant influence on storage behavio r and intertemporal arbitrage pricing.