Inventories under Joint Production: An Empirical Analysis of Petroleum Refining
Open accessAbstract
This study examines the determinants of inventory investment under joint production. We simultaneously estimate a set of optimal sales relations, variable input demands, and a set of Euler equations for capital and inventories of raw materials, work in process, and final products in the petroleum refining industry. The Euler conditions provide a model for the convenience yield discussed in the returns-to-storage literature. The cost savings from holding inventories and expected changes in marginal production costs are important components of the convenience yield. We also find significant cost and stock interactions that may affect short-run price and inventory dynamics in petroleum product markets.
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To the authors' knowledge, the distinction between oil demand elasticity in production and in use has not been discussed in the literature, nor has there been any attempt to estimate this oil demand elasticity in use.
“To our knowledge, this distinctionwith the exception of Considine (1997) has not been discussed in the literature, nor has there been any attempt in the literature to estimate this oil demand elasticity in use.”
From THE ROLE OF INVENTORIES AND SPECULATIVE TRADING IN THE GLOBAL MARKET FOR CRUDE OIL (2014) · cites this paper as Considine (1997)
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THE ROLE OF INVENTORIES AND SPECULATIVE TRADING IN THE GLOBAL MARKET FOR CRUDE OIL
Kilian, L., & Murphy, D. P. (2014) · Journal of Applied Econometrics · doi:10.1002/jae.2322 · Cited by 1,481 · see citing works
- Authors
- Considine, T. J.
- Affiliations
- Pennsylvania State University (US)
- Corresponding author
- Considine, Timothy J.
- Venue
- Review of Economics and Statistics
- Publisher
- MIT Press
- Published
- 1997-08
- Volume
- 79
- Issue
- 3
- Pages
- 493-502
- ISSN
- 0034-6535 (ISSN-L)
- 1530-9142
- OpenAlex
- W2005889960
- Cited by
- 34
- References
- 0
- Citations by year
- 2026: 1 · 2021: 1 · 2020: 1 · 2019: 2 · 2017: 3 · 2016: 1 · 2015: 1 · 2013: 3 · 2012: 2
- FWCI
- 2.14
- Type
- journal article
- Language
- en
- Open access
- green
- papers.ssrn.com
- Locations
- The Review of Economics and Statistics (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- SSRN Electronic Journal (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Market Dynamics and Volatility
- Social Sciences › Business, Management and Accounting › Management Information Systems › Supply Chain and Inventory Management
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economics of Agriculture and Food Markets
- Keywords
- inventory investment, joint production, petroleum refining, convenience yield, Euler equations, work-in-process inventory, raw material inventory, marginal cost of production, inventory dynamics, petroleum product prices
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