Imperfect competition with costly disposal
研究了处置成本对垄断和竞争市场中企业利润与消费者剩余的影响，发现高处置成本与需求不确定性共同导致企业放弃早期低成本生产，并可能使预期利润随处置成本上升。
This paper studies the effect of disposal costs on consumer surplus and firms’ profits. First, we analyze a monopolist producing inventories either early on at a low cost and with little information about demand, or later with more information yet at a higher cost. Unsold products are discarded. The firm forgoes an early production cost advantage if and only if the disposal cost and demand uncertainty are both simultaneously high. Expected disposal decreases in its cost, yet the firm lowers its production to mitigate costs, resulting in lower expected profit and consumer surplus. Similar results hold for firms competing in sales volumes with unobserved inventories. Ex-ante symmetric firms may choose different production timings. The disposal cost substitutes information about demand, thereby affecting a firm’s information advantage. Accordingly, a firm’s expected profit may increase with the disposal cost. Firms may adjust their production timing, resulting in a discontinuous change in the expected profit and consumer surplus.