Had this book been written some centuries ago, it would have carried one of those leisurely titles that made authors' prefaces unnecessary. Someone might well have called it The Stockpiler's Preceptor: or, A Compleat Theory of Rational, Aggregate, Interperiod Storage. Containing a true Account of the Effects of Storage upon the Sequence of Prices & Production of Commodities. To which are added, divers & useful Applications of the aforesaid Theory to Inventories of raw Material, Monopoly, Interactions with Trade, publick Interventions, &c. &c. But brevity in book titles has since become a virtue, so a word to the reader about our intentions seems advisable here. Our focus is on a multiperiod model of the competitive equilibrium resulting from riskneutral, forward-looking storers. Although our stylized commodity is most obviously identified with agricultural products, the theory is sufficiently general to offer insights into metals and petroleum as well. We emphasize the behavior of marketwide inventories, at which level price and new production are also endogenous. Our model presents the “first-best” reaction to the continual social uncertainty of unalterable, unpredictable weather or similar exogenous shocks. Rational storage cannot eliminate the effects of these periodic shocks but it can modify them.

We believe it necessary to understand the allocative and welfare effects of idealized competitive storage for an idealized commodity in an idealized market that clears every period before one attempts an analysis of more realistic and more complex situations. Specifically, the dynamic sequence of equilibria must be understood before one can analyze possible disequilibria.