Existing literature on dealer liquidity provision and inventory management has focused on dealer inventory costs. I uncover a new inventory benefit channel: dealers strategically build inventory in order to compete for market share. I assess the relative impact of the inventory benefit and costs...

Established findings suggest that strategic inventory may alleviate double marginalization and improve the efficiency of a decentralized distribution channel. In this paper, we examine the effect of strategic inventory in the presence of chain-to-chain competition. We show that as the...

Firms often must procure inventory/capacity before knowing what the demand will be, so there is a potential for a mismatch between inventory and demand, the “inventory risk.” We show that because of inventory risk, an increase in the number of competitors can lead to an increasing trend in...