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Endogenous Choice Of Institution Under Supply And Demand Risks In Laboratory Forward And Spot Markets

Author Info

  • Menkhaus, Dale J.
  • Bastian, Christopher T.
  • Phillips, Owen R.
  • O'Neill, Patrick D.
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    Abstract

    Laboratory methods are used to investigate the impacts of supply and demand risks in a forward market on prices, quantities traded, and earnings when the choice of transacting in a forward or spot market is endogenous. Forward market activity dominates spot trading, with 80-90% of the trades taking place in the forward market regardless of how risk arises. Buyer earnings tend to be higher than earnings for sellers when there is risk. A correspondence exists between risk type and the relative increase in buyer earnings. Buyer earnings increase significantly when demand is random, and also when both supply and demand are random.

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    File URL: http://purl.umn.edu/30793
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    Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

    Volume (Year): 24 (1999)
    Issue (Month): 02 (December)
    Pages:

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    Handle: RePEc:ags:jlaare:30793
    Contact details of provider: Web page: http://waeaonline.org/

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    Keywords: Demand and Price Analysis;

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    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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    1. Boehlje, Michael, 1996. "Industrialization of Agriculture: What are the Implications?," Choices, Agricultural and Applied Economics Association, vol. 11(1).
    2. Noussair, Charles N & Plott, Charles R & Riezman, Raymond G, 1995. "An Experimental Investigation of the Patterns of International Trade," American Economic Review, American Economic Association, vol. 85(3), pages 462-91, June.
    3. Krogmeier, Joseph L. & Menkhaus, Dale J. & Phillips, Owen R. & Schmitz, John D., 1997. "An Experimental Economics Approach to Analyzing Price Discovery in Forward and Spot Markets," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(02), pages 327-336, December.
    4. Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-55, December.
    5. Mestelman, Stuart & Welland, Deborah & Welland, Douglas, 1987. "Advance production in posted offer markets," Journal of Economic Behavior & Organization, Elsevier, vol. 8(2), pages 249-264, June.
    6. Krogmeier, Joseph L. & Menkhaus, Dale J. & Phillips, Owen R. & Schmitz, John D., 1997. "An Experimental Economics Approach To Analyzing Price Discovery In Forward And Spot Markets," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(02), December.
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    Cited by:

    1. Maurice Doyon & Lota Dabio Tamini & Virginie Simard & Kent Messer & Harry M. Kaiser, 2006. "L'économie expérimentale pour l'analyse de modifications au système centralisé de vente du quota laitier au Québec," CIRANO Working Papers 2006s-23, CIRANO.
    2. Buccola, Steven T. & Durham, Catherine A. & Gopinath, Munisamy & Henderson, Erin, 2001. "Food Manufacturing Cooperatives' Overseas Business Portfolios," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), July.
    3. Phillips, Owen R. & Menkhaus, Dale J., 2006. "The Culture of Private Negotiation: Price Drift in Bilateral Bargaining," 2006 Annual meeting, July 23-26, Long Beach, CA 21168, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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