The Value of Ideal Contingency Markets in Agriculture

Robert J. Myers

American Journal of Agricultural Economics, 1988, vol. 70, issue 2, 255-267

Abstract: An incomplete markets equilibrium, in which no contingency markets are available, is compared to a complete markets equilibrium formed by introducing a futures market and a crop insurance market. The two regimes are compared using comparative static and welfare analyses. Numerical examples highlight important characteristics of the model and illustrate how the effects of introducing contingency markets can be quantified. The main conclusions are that contingency markets in agriculture increase economic efficiency, but there is no guarantee that farmers and consumers both benefit. It is found that futures and crop insurance markets may reduce farmer welfare when the demand for farm products is price inelastic.

Date: 1988
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://hdl.handle.net/10.2307/1242065 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:70:y:1988:i:2:p:255-267.

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().