Considering an Informational Role for a Futures Market

Pamela P. Brannen and Edwin F. Ulveling

The Review of Economic Studies, 1984, vol. 51, issue 1, 33-52

Abstract: This study compares how well current spot prices predict future spot prices for a variety of commodities in a non-futures market environment and examines how the predictive power of the price system is altered after the initiation of futures trading. The results indicate a positive association between the inability of a non-futures market price system to predict the future spot price and the subsequent development of a futures market. The claim that traders can earn a return on information collection after the introduction of a futures price into the pricing system is supported for some, but not all, commodities.

Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:51:y:1984:i:1:p:33-52.

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