Advance Delivery Contracts. Revenue Pools and Price Discrimination

A. Hollander and Clive Fraser ()

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: This Paper Provides a Rationale for the Difference Between Contract and Spot Prices Which Is Not Based on Risk Aversion But on Price Discrimination. We Model the Behaviour of a Large Buyer Who Groups an Advance Delivery Contract for Part of His Requirements. His Remaining Purchases Are Executed on the Spot Market Which May Be Supplied Either by the Other Group Or by Both Groups. the Buyer Recoups the Premium Paid on Contracted Output Through a Lower Price on the Spot Market.

Keywords: Contracts; Prices; Discrimination (search for similar items in EconPapers)
Pages: 12P. pages
Date: 1986
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Journal Article: Advance delivery contracts, revenue pools and price discrimination (1989)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montde:8654

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