Strategic inventories in a dynamic monopoly with limited commitment Fabio Antoniou ∗ and Raffaele Fiocco † Abstract In a storable good monopoly where demand changes over time, we investigate the firm’s strategic incentives to hold inventories in response to the possibility of consumer stockpiling. The literature on storable goods has demonstrated that consumer stockpiling in anticipation of higher future prices harms the firm’s profitability, particularly when the firm cannot commit to future prices. We show that, in this environment, the firm holds inventories as a strategic device to mitigate the loss from the lack of commitment. Higher production costs improve the strategic value of inventories. The impact of inventories on equilibrium prices depends on the demand curvature in a non-trivial manner. Keywords: commitment, consumer stockpiling, monopoly, strategic inventories. JEL Classification: D21, D42, L12. ∗ Humboldt University of Berlin, Institute for Economic Theory I, Spandauer Straße 1, 10178 Berlin, Germany. Email address: fabio.antoniou@wiwi.hu-berlin.de † Universitat Rovira i Virgili, Department of Economics and CREIP, Avinguda de la Universitat 1, 43204 Reus, Spain; University of Mannheim, Department of Economics, L7, 3-5, 68131 Mannheim, Germany (on leave since September 2016). Email addresses: raffaele.fiocco@urv.cat; raffaele.fiocco@uni-mannheim.de 1