This paper investigates the economic implications of storage behavior under imperfect
competition. It evaluates the economic dynamics implied by a storage firm under alternative
market structures. This includes perfect competition as well as imperfect competition under
Cournot behavior. The conceptual analysis is used to specify and estimate a model of storage
behavior, with an econometric application to the US American cheese market. The empirical
results provide statistical evidence of non-competitive storage behavior. They show that the
exercise of market power contributes to reduced stock fluctuations and increased price
instability in the US cheese market.
