The Role of Observability in Futures Markets
AbstractAllaz (1992) and Allaz and Vila (1993) show that in an oligopolistic industry the introduction of a futures market that operates prior to the spot market induces more competitive outcomes. Hughes and Kao (1997) show that this result presumes that firms' future positions are perfectly observed, and that when firms' positions are not observed the Cournot outcome arises. We study an alternative formulation of observability, where the behavior of participants in the futures market is explicitly analyzed, and show that this approach leads to different results. Imperfect observability induces more competitive outcomes than Allaz and Vila's model.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.
Volume (Year): 6 (2006)
Issue (Month): 1 (June)
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Other versions of this item:
- José Luis Ferreira, 2001. "The Role Of Observability In Futures Markets," Economics Working Papers we015316, Universidad Carlos III, Departamento de Economía.
- Ferreira, José Luis, . "The role of observability in futures markets," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/260, Universidad Carlos III de Madrid.
- Ferreira, José Luis, . "The role of observability in futures markets," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/5154, Universidad Carlos III de Madrid.
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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