On oligopolistic markets with dynamic production functions one can often observe attempts toward cooperative agreements to "stabilize" prices. On the other hand, it is a well-known fact that cartel agreements are difficult to control, especially when the sellers come from different countries. In such a situation partial agreements -- for instance, founding a common marketing board -- seem more likely than detailed cartel agreements.
In this paper we analyze the economic institution of a common buffer stock agency which can shift supply from present to future periods. Although the buffer stock agency determines the prices, individual production amounts are chosen independently by the sellers. We study the case of a price buffer stock agency which cannot produce, as well as the situation in which a major seller controls the buffer stock. One interesting result is that it makes quite an important difference whether the buffer stock agency is or is not able to produce. Loosely speaking one can say that only when the buffer stock is controlled by a producer do the other sellers not have to consider the future effects of present supply decisions
