The Economics of Storing a Non-storable Commodity.

Commodity stabilization under a buffer stock and under a buffer fund are compared. In the c ase where a good cannot be physically stored, stability brought about by a buffer fund scheme cannot result in a net welfare improvement f or society. When instability is due only to demand variability, there are no gainers or losers; when instability is due to supply variabil ity, a buffer fund does not result in a welfare loss to society, but there is a transfer of income from taxpayers to producers. Hence, pro ducer arguments for a buffer fund are a desire for a redistribution o f income in their favor.