Economics, Econometrics and Finance
8 years ago

Futures Markets Reduce Price Volatility, Stabilizing Potato Market

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Journal of Agricultural Economics
Futures Markets and Spot Price Volatility: A Case Study
C. Wyn Morgan

Paper Summary

Futures markets can help reduce price volatility in spot markets by providing price insurance and information for traders. A study on British potato prices from 1969 to 1996 found that the introduction of futures trading in 1980 led to a decrease in price volatility, improving the efficiency of storage decisions.

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