This paper examines how strategic customer behavior impacts e-tailers' inventory storage location, pricing and inventory level decisions. We build a stylized model where an e-tailer either has only a central warehouse, or add a local warehouse and thus has both warehouses for inventory storage....

We study the aggregate implications of (S,s) inventory policies in a dynamic general equilibrium model with aggregate uncertainty. Firms in the model's retail sector face idiosyncratic demand risk, and (S,s) inventory policies are optimal because of fixed order costs. The distribution of...