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Supply and Demand Risks in Laboratory Forward and Spot Markets: Implications for Agriculture

Published online by Cambridge University Press:  28 April 2015

Dale J. Menkhaus ,
Chris T. Bastian ,
Owen R. Phillips  and
Patrick D. O'Neill
Dale J. Menkhaus
Affiliation:
Department of Agricultural and Applied Economics, Universiy of Wyoming
Chris T. Bastian
Affiliation:
Department of Agricultural and Applied Economics, University of Wyoming
Owen R. Phillips
Affiliation:
Department of Economics and Finance, University of Wyoming
Patrick D. O'Neill
Affiliation:
Department of Agricultural and Applied Economics, University of Wyoming
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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 institution. 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.

Keywords

laboratory marketsforward marketspot marketsupply and/or demand risks
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 32 , Issue 1 , April 2000 , pp. 159 - 173
Copyright
Copyright © Southern Agricultural Economics Association 2000

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