Pricing Efficiency in Centralized and Noncentralized Markets

Steven T. Buccola

American Journal of Agricultural Economics, 1985, vol. 67, issue 3, 583-590

Abstract: Pricing efficiency in centralized markets is compared with that in noncentralized markets. On the basis of a price formation model, centrally discovered prices are hypothesized to adjust more slowly to equilibrium, but to have lower unpredictable variability, than noncentrally discovered prices. These hypotheses are borne out strongly in market experiments. Mean-squared error is found to be lower in centralized than in noncentralized trading, suggesting centralized markets are the more price efficient.

Date: 1985
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:67:y:1985:i:3:p:583-590.

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