Arbeitspapier
Adjustment Costs, Inventories and Output
This paper analyzes the optimal adjustment strategy of an inventory-holding firm facing price- and quantity-adjustment costs in an inflationary environment. The model nests both the original menu-cost model that allows production to be costlessly adjusted, and the later model that includes price- and quantity-adjustment costs, but rules out inventory holdings. The firm's optimal adjustment strategy may involve stockouts. At low inflation rates, output is inversely related to the inflation rate, and the length of time demand is satisfied decreases with the absolute value of the demand elasticity, the storage cost, and the real interest rate.
- Language
-
Englisch
- Bibliographic citation
-
Series: Kiel Working Paper ; No. 1340
- Classification
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Wirtschaft
Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
Firm Behavior: Theory
Organization of Production
- Subject
-
Menu costs
Quantity-adjustment costs
Inventories
Output
Inflation
Produktion
Betriebliche Lagerhaltung
Anpassungskosten
Inflation
Theorie
- Event
-
Geistige Schöpfung
- (who)
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Danziger, Leif
- Event
-
Veröffentlichung
- (who)
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Kiel Institute for the World Economy (IfW)
- (where)
-
Kiel
- (when)
-
2007
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Danziger, Leif
- Kiel Institute for the World Economy (IfW)
Time of origin
- 2007
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