Inventories and Sticky Prices: Note

In a previous article, Alan Blinder analyzed the relationship between optimal inventory decisions and the process of price adjustment. Arguing that inventory permits separation of production and sale decisions and allows the firm greater flexibility in responding to anticipated demand disturbances,...

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Veröffentlicht in:The American economic review 1983-09, Vol.73 (4), p.815-816
1. Verfasser: Schutte, David P.
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description In a previous article, Alan Blinder analyzed the relationship between optimal inventory decisions and the process of price adjustment. Arguing that inventory permits separation of production and sale decisions and allows the firm greater flexibility in responding to anticipated demand disturbances, Blinder demonstrates that the responsiveness of relative prices depends on the cost of storage and the temporal structure of the demand shocks. Blinder's paper relies upon a simple model of a monopolist capable of backlogging orders and storing unsold goods. This feature of the model vitiates Blinder's extension of his result to situations in which order backlogs are prohibited. However, this does not negate the value of Blinder's central theorem.
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identifier ISSN: 0002-8282
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source Periodicals Index Online; EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing
subjects Business orders
Cost of sales
Demand shocks
Economic models
Economic theory
Inflexible prices
Inventory
Inventory control
title Inventories and Sticky Prices: Note
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