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An Experimental Economics Approach to Analyzing Price Discovery in Forward and Spot Markets

Year: 1997

Type: article

Abstract: Laboratory experiments are used to generate data that facilitate investigation of pricing behavior in forward and spot markets. Results suggest a tendency for prices in a spot market to converge to levels higher than those in a forward market. The difference in these market environments is the supply schedule. Buyers in a spot market are aware that supply is inelastic and become relatively aggressive bidders. Forward markets have a relatively elastic supply schedule and buyers fare better. This may motivate firms to promote forward markets and/or vertically integrate in the procurement of inputs.

Source: Journal of Agricultural and Applied Economics

DOI: 10.1017/s1074070800007823

Authors: Joseph L. Krogmeier, Dale J. Menkhaus, Owen R. Phillips, John D. Schmitz

Institution: University of Wyoming

Language: English

Topic: Experimental Behavioral Economics Studies

Subfield: Safety Research

Field: Social Sciences

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2167093630

FWCI: 5.108

Cites: 24

Cited by: 23

Related to: 10