EQUILIBRIUM INVESTMENT IS REDUCED IF WE ALLOW FOR FORWARD CONTRACTS

Veronika Grimm () and Gregor Zoettl

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper we analyze incentives to invest in capacity prior to asequence of Cournot spot markets with varying demand. We compareequilibrium investment in the absence and in presence of the possibility to tradeon forward markets. We find that the possibility to trade forwards reducesequilibrium investments.

Keywords: Investment incentives; demand fluctuations; forward markets (search for similar items in EconPapers)
JEL-codes: D43 L13 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2006-02
New Economics Papers: this item is included in nep-fmk and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2006-05

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