Economics, Econometrics and Finance
4 years ago

New study reveals how contracts impact spot market prices dramatically.

RePEc: Research Papers in Economics
On the Coexistence of Spot and Contract Markets: a Delivery Requirement Explanation
George Hendrikse

Paper Summary

The article explains how spot and contract markets can coexist. Contracts with delivery requirements affect spot market prices. Fewer contracts lower spot market prices initially, but more contracts increase prices later. Contract prices rise with more contracts. More contracts reduce spot market price variability.

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