Effects of Alternative Marketing Arrangements on Spot Market Price Distribution in the U.S. Hog Market

We propose a stylized model that elucidates the two channels through which alternative marketing arrangements (AMAs) can affect the spot market price in livestock markets. The direct effect of AMAs on spot market price works through their effect on demand and supply conditions in the spot market. This effect has been widely studied in the literature. The indirect effect works through their effect on spot market price volatility. This effect has been ignored in the literature. We then estimate a dynamic (time series) model with data from the U.S. hog market to test our model implications and quantify the two effects. We find increases in the use of AMAs increase spot market price volatility and decrease spot market price level. The short-run effects are small but the long-run effects are nontrivial.


Issue Date:
2014
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/168759
Page range:
2-2
Total Pages:
2
JEL Codes:
Q13; L66
Series Statement:
Poster
4408




 Record created 2017-04-01, last modified 2017-08-27

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