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Supply And Demand Risks In Laboratory Forward And Spot Markets: Implications For Agriculture

Author

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

Abstract

Laboratory experimental methods are used to investigate the impacts of supply and/or demand risks on prices, quantities traded, and earnings within forward and spot market institutions. Random demand and/or supply shifts can be as much as 25 percent of the expected equilibrium outcome. Nevertheless, results suggest that the spot or forward trading institution itself has a greater influence on market outcomes than the presence of risk within the trading institutions. Sellers tend to have relatively higher earnings in a spot market than buyers, regardless of the risk. Total surplus, however, generally is greater in a forward market.

Suggested Citation

  • Menkhaus, Dale J. & Bastian, Christopher T. & Phillips, Owen R. & O'Neill, Patrick D., 2000. "Supply And Demand Risks In Laboratory Forward And Spot Markets: Implications For Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(01), pages 1-15, April.
    • Handle: RePEc:ags:joaaec:15388
    DOI: 10.22004/ag.econ.15388
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    References listed on IDEAS

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    1. Boehlje, Michael, 1996. "Industrialization of Agriculture: What are the Implications?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 11(01), pages 1-4.
    2. Friedman,Daniel & Sunder,Shyam, 1994. "Experimental Methods," Cambridge Books, Cambridge University Press, number 9780521456821, January.
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    4. 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(2), pages 1-10, December.
    5. Charles N. Noussair & Charles R. Plott & Raymond G. Riezman, 2013. "An Experimental Investigation of the Patterns of International Trade," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 17, pages 299-328, World Scientific Publishing Co. Pte. Ltd..
    6. Smith, Vernon L, 1976. "Experimental Economics: Induced Value Theory," American Economic Review, American Economic Association, vol. 66(2), pages 274-279, May.
    7. 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(2), pages 327-336, December.
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    Cited by:

    1. Fumasi, Roland J., 2005. "Estimating The Impacts Of Differing Price-Risk Management Strategies On The Net Income Of Salinas Valley Lettuce Producers: A Stochastic Simulation Approach," 2005 Annual Meeting, July 6-8, 2005, San Francisco, California 36310, Western Agricultural Economics Association.
    2. Phillips, Owen R. & Nagler, Amy M. & Menkhaus, Dale J. & Huang, Shanshan & Bastian, Christopher T., 2014. "Trading partner choice and bargaining culture in negotiations," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 178-190.
    3. Miyashita, Kazuo, 2015. "Developing an Online Market Mechanism for Trading Perishable Agricultural Commodities," 2015 Conference, August 9-14, 2015, Milan, Italy 212470, International Association of Agricultural Economists.

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