Measuring the Benefits from Futures Markets: Conceptual Issues

Donald Lien and James Quirk
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Donald Lien: Department of Economics, University of Texas at San Antonio, U.S.A.
James Quirk: Emeritus Professor, California Institute of Technology, U.S.A.

International Journal of Business and Economics, 2002, vol. 1, issue 1, 53-58

Abstract: This paper illustrates that the usual consumer surplus approach to evaluation of the benefits of a futures market fails because of certain unobserved benefits. In particular, when futures markets provide benefits in the form of a reduced variability of future spot prices, the usual consumer surplus approach will systematically understate the benefits of futures markets.

Keywords: futures markets; price variability; consumer surplus (search for similar items in EconPapers)
JEL-codes: D6 G0 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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