FUTURES MARKETS AND FIRM DECISIONS UNDER PRICE, PRODUCTION, AND FINANCIAL UNCERTAINTY

Vickie J. Alexander, Wesley Musser and George Mason

Southern Journal of Agricultural Economics, 1986, vol. 18, issue 2, 11

Abstract: Incorporation of futures markets into the theory of the firm under uncertainty has received considerable attention in risk management. A theoretical model of optimal firm decisions in cash and futures markets considering price, production, and financial risks is presented. Production and marketing strategies for corn and soybeans in Georgia and Illinois are analyzed to determine the optimal amount of futures contracting which may be a hedge or a speculative position. A partial hedge is optimal for most situations for risk averse producers when the amount hedge is variable. With fixed quantity transactions, speculative and cash positions, but not hedging, tend to be E-V efficient.

Keywords: Marketing (search for similar items in EconPapers)
Date: 1986
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Citations: View citations in EconPapers (7)

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Journal Article: Futures Markets and Firm Decisions Under Price, Production, and Financial Uncertainty (1986)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:sojoae:29781

DOI: 10.22004/ag.econ.29781

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