Can Spot and Contract Markets Co-Exist in Agriculture?

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dc.contributor.author Carriquiry, Miguel
dc.contributor.author Babcock, Bruce
dc.contributor.author Babcock, Bruce
dc.contributor.department Center for Agricultural and Rural Development
dc.date 2018-02-16T13:21:38.000
dc.date.accessioned 2020-06-30T01:03:55Z
dc.date.available 2020-06-30T01:03:55Z
dc.date.embargo 2015-06-15
dc.date.issued 2002-08-01
dc.description.abstract <p>New production technologies, consumers who are more discriminating, and the need for improved coordination are among the forces driving the move from spot markets to contracts. Some worry that this tendency will result in the disappearance of spot markets, or at least that they will become too thin to be of help for an efficient price discovery process. Other authors point to the reduction in welfare of independent producers resulting from contracting in oligopsonistic industries. While a large body of literature is available tackling the contract versus spot market decision, much less is known about the reasons that lead to procurement in both markets. This paper provides a simple model to study how fundamental economic factors influence the contracting behavior of farmers and processors. In the model, processors contract upstream with price-taking farmers. Participation in both markets arises as a Nash equilibrium for a wide range of parameterizations. Numerical methods are used to examine the effects of fundamental economic factors on the relative size of the spot and contract markets.</p>
dc.identifier archive/lib.dr.iastate.edu/card_workingpapers/321/
dc.identifier.articleid 1331
dc.identifier.contextkey 7219399
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath card_workingpapers/321
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/12656
dc.source.bitstream archive/lib.dr.iastate.edu/card_workingpapers/321/02wp311.pdf|||Fri Jan 14 23:35:05 UTC 2022
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agricultural Economics
dc.subject.disciplines Industrial Organization
dc.subject.keywords contract markets
dc.subject.keywords contracting in agriculture
dc.subject.keywords specialty grains
dc.subject.keywords spot markets
dc.subject.keywords yield risk
dc.title Can Spot and Contract Markets Co-Exist in Agriculture?
dc.type article
dc.type.genre article
dspace.entity.type Publication
relation.isAuthorOfPublication be977ffd-4ef3-4f33-a854-9db833e957f4
relation.isOrgUnitOfPublication 1a6be5f1-4f64-4e48-bb66-03bbcc25c76d
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