Autore
Fingleton, John

Titolo
Inventory holdings by a monopolist middleman
Periodico
European University Institute of Badia Fiesolana (Fi). Department of Economics - Working papers
Anno: 1991 - Fascicolo: 60 - Pagina iniziale: 1 - Pagina finale: 24

This paper uses results from optimal control theory to analyse the dynamic profit maximising inventory policy of a monopolist middleman in continuous time. The middleman has two choice variables - sales and purchases - and the first step is to change the problem to one in a single variable (net purchases, denoted x) enabling the use of a profit function 7rtx,t). The optimal policy is a vector which maximises the integral of this profit function subject to a differential equation and some other constraints. The first section gives an overview of the recent, relevant literature on intermediation by middlemen. Section 2 gives necessary and sufficient optimality conditions for the relevant class of problem. Section 3 outlines the model and characterises and discusses the solution, an example of which is given in section 4. Section 5 discusses extensions and limitations. The concavity of the profit function is an important element in determining the type of solution which emerges, and this is analysed in the Appendix.



Testo completo: http://hdl.handle.net/1814/399

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