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Committed Procurement in Privately Negotiated Markets: Evidence from Laboratory Markets

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  • Darlington M. Sabasi
  • Christopher T. Bastian
  • Dale J. Menkhaus
  • Owen R. Phillips

Abstract

Previous research suggests an increase in committed procurement can result in lower cash market prices for livestock. There is a paucity of research that ascertains prices received by market agents trading in a prior bargaining session via alternative marketing arrangements versus those who have not. We use laboratory market experiments to analyze the potential impacts of committed procurement on privately negotiated transactions when some traders have two windows of negotiation and others have one. Results illustrate that those who do not engage in prior trading are at a bargaining disadvantage due to matching and inventory loss risks. Copyright 2013, Oxford University Press.

Suggested Citation

  • Darlington M. Sabasi & Christopher T. Bastian & Dale J. Menkhaus & Owen R. Phillips, 2013. "Committed Procurement in Privately Negotiated Markets: Evidence from Laboratory Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1122-1135.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:5:p:1122-1135
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    File URL: http://hdl.handle.net/10.1093/ajae/aat051
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    Cited by:

    1. Bastian, Christopher T. & Jones Ritten, Chian & Feuz, Bridger & Nagler, Amy M. & Smutko, Steven, 2018. "Can Producers Bargain for Better Prices? Implications from Wyoming Focus Groups," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2018.
    2. Karsyn Lamb & Kristiana Hansen & Christopher Bastian & Amy Nagler & Chian Jones Ritten, 2019. "Investigating Potential Impacts of Credit Failure Risk Mitigation on Habitat Exchange Outcomes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 815-842, July.
    3. Hildebrand, Kayla & Chung, Chinjin, 2023. "Selectivity Bias and Cattle Price in the Cattle Procurement Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(3), September.

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