This book examines the behaviour of economies on the international market under uncertainty when some goods are storable. While Helpman and Razin have discussed the fundamental theorems of international trade under uncertainty and Newbery and Stiglitz have considered storage as a means of reducing risk, this book is the first to integrate the two theories.
The authors discuss welfare-maximising storage for a small economy, and for a large economy under various competitive conditions. Storage and trade behaviour when other assets such as stocks and bond exist to spread risk is examined. The effect of optimal storage when there is unemployed labour and the effects of price- and income-stabilizing storage (which are not in general optimal) are considered. Finally, the authors investigate storage as a means to national independence: its costs and benefits.
The book will be essential reading for researchers and post-graduate students interested in international trade theory and agricultural economics.