The Role Of Observability In Futures Markets
AbstractAllaz and Vila (1993) show that oligopolistic industries may become more competitive if a futures market is added previous to the spot market. Later, Hughes and Kao (1997) show that this result occurs only if positions in the futures market are observed, and that without this condition the result is again the Cournot equilibrium. In this work we study different explicit formulations of observability and argue that the lack of it may induce a result very different from the one anticipated in Hughes and Kao (1997). By comparing the game forms of the different models, one can discuss about the suitability of either of them. In particular, the one we find most reasonable fit better some of the stylized facts of an industry like the power market in the U.K.
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Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we015316.
Date of creation: Oct 2001
Date of revision:
Other versions of this item:
- Ferreira José Luis, 2006. "The Role of Observability in Futures Markets," The B.E. Journal of Theoretical Economics, De Gruyter, De Gruyter, vol. 6(1), pages 1-22, June.
- 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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- Ferreira, Jose Luis, 2003. "Strategic interaction between futures and spot markets," Journal of Economic Theory, Elsevier, Elsevier, vol. 108(1), pages 141-151, January.
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- Holmberg, P. & Willems, B., 2012.
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Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge
1252, Faculty of Economics, University of Cambridge.
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- Holmberg, P. & Willems, Bert, 2012. "Relaxing Competition through Speculation: Committing to a Negative Supply Slope," Discussion Paper, Tilburg University, Tilburg Law and Economic Center 2012-039, Tilburg University, Tilburg Law and Economic Center.
- Le Coq, Chloe & Orzen, Henrik, 2006.
"Do forward markets enhance competition?: Experimental evidence,"
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- Le Coq, Chloé & Orzen, Henrik, 2002. "Do Forward Markets Enhance Competition? Experimental Evidence," Working Paper Series in Economics and Finance 506, Stockholm School of Economics, revised 01 Oct 2004.
- Miguel Vazquez & Michelle Hallac, 2014. "Analysis Of The Strategic Use Of Forward Contracting In Electricity Markets," Anais do XLI Encontro Nacional de Economia [Proceedings of the 41th Brazilian Economics Meeting], ANPEC - AssociaÃ§Ã£o Nacional dos Centros de PÃ³sgraduaÃ§Ã£o em Economia [Brazilian Association of Gra 129, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
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