| Registro completo |
| Provedor de dados: |
AgEcon
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| País: |
United States
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| Título: |
On the Coexistence of Spot and Contract Markets: a Delivery Requirement Explanation
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| Autores: |
Hendrikse, George W.J.
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| Data: |
2006-04-28
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| Ano: |
2006
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| Palavras-chave: |
Spot market
Contract externality
Co-existence
Delivery requirement
Marketing
D40
L10
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| Resumo: |
A model is presented in which spot and contract market exchange co-exist. A contract consists of a delivery requirement between an upstream and a downstream party. Contract formation determines to a certain extent the probability distribution of the spot market price. This contract formation externality entails the removal of high reservation price buyers and various sellers from the spot market. The first effect decreases the expected spot market price when the number of contracts is small, whereas the decrease in the number of sellers and additional residual contract demand increase the expected spot market price beyond a certain number of contracts. It implies an endogenous upper bound on the number of contracts. Contract prices are positively related to the number of contracts. Finally, additional contracts reduce the variance of the spot market price when the number of contracts is sufficiently large.
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| Tipo: |
Conference Paper or Presentation
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| Idioma: |
Inglês
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| Identificador: |
21000
http://purl.umn.edu/21041
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| Editor: |
AgEcon Search
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| Relação: |
American Agricultural Economics Association>2006 Annual meeting, July 23-26, Long Beach, CA
Selected Paper
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| Formato: |
27
application/pdf
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