scholarly journals Hedging with Futures and Options under a Truncated Cash Price Distribution

1999 ◽  
Vol 31 (3) ◽  
pp. 449-459 ◽  
Author(s):  
Steven D. Hanson ◽  
Robert J. Myers ◽  
James H. Hilker
Keyword(s):  
Supply And Demand ◽  
Agricultural Producers ◽  
Market Prices ◽  
Basis Risk ◽  
Agricultural Improvement ◽  
Loan Rate ◽  
Price Distribution ◽  
Farm Programs ◽  
Yield Risk ◽  
Futures And Options

AbstractMany agricultural producers face cash price distributions that are effectively truncated at a lower limit through participation in farm programs designed to support farm prices and incomes. For example, the 1996 Federal Agricultural Improvement Act (FAIR) makes many producers eligible to obtain marketing loans which truncate their cash price realization at the loan rate, while allowing market prices to freely equilibrate supply and demand. This paper studies the effects of truncated cash price distributions on the optimal use of futures and options. The results show that truncation in the cash price distribution facing an individual producer provides incentives to trade options as well as futures. We derive optimal futures and options trading rules under a range of different truncation scenarios. Empirical results highlight the impacts of basis risk and yield risk on the optimal futures and options portfolio.

Solar Renewable Energy Credit Price Volatility and Investment Returns: Have Policies Stranded Capital Investment?

Commonwealth ◽  
2017 ◽  
Vol 19 (1) ◽  
Author(s):  
Somayeh Youssefi ◽  
Patrick L. Gurian
Keyword(s):  
Solar Energy ◽  
Capital Investment ◽  
Supply And Demand ◽  
Price Volatility ◽  
The United States ◽  
Investment Model ◽  
Capital Investments ◽  
Demand Model ◽  
Market Prices ◽  
Investment Returns

Pennsylvania is one of a number of U.S. states that provide incentives for the generation of electricity by solar energy through Solar Renewal Energy Credits (SRECs). This article develops a return on investment model for solar energy generation in the PJM (mid-­Atlantic) region of the United States. Model results indicate that SREC values of roughly $150 are needed for residential scale systems to break even over a 25-­year project period at 3% interest. Market prices for SRECs in Pennsylvania have been well below this range from late 2011 through the first half of 2016, indicating that previous capital investments in solar generation have been stranded as a result of steep declines in the value of SRECs. A simple conceptual supply and demand model is developed to explain the sharp decline in market prices for SRECs. Also discussed is a possible policy remedy that would add unsold SRECs in a given year to the SREC quota for the subsequent year.

Defining the duty to contribute: Against the market solution

2017 ◽  
Vol 18 (4) ◽  
pp. 469-488
Author(s):  
Markus Furendal
Keyword(s):  
Decision Procedure ◽  
Supply And Demand ◽  
Market Value ◽  
Social Value ◽  
Market Prices ◽  
Goods And Services ◽  
The Social ◽  
Principles Of Justice ◽  
Special Circumstances ◽  
Specific Amount

If there is a duty of justice to contribute to society, which asks individuals to produce a specific amount of goods and services that can be redistributed, we need a decision-procedure to know when we have done our part. This paper analyses and critically assesses the commonly suggested decision-procedure of relying on market prices to measure the value of one’s contribution. It is usually assumed that a high salary indicates that one’s talents are put to good use, but this presupposes both that market prices of labour are correct reflections of supply and demand, and that market prices are correct reflections of social value. I criticise both assumptions and argue that the social value of a contribution cannot simply be a function of its market value, but is also influenced by the principles of justice that support the duty to contribute. Further, the market solution is incapable of valuing contributions that lack market prices, like non-marketised care labour. The market solution thus fails as a decision-procedure under other than special circumstances. This does not mean, however, that we need to give up the idea of a duty to contribute.

scholarly journals Official agricultural land price in the Slovak Republic

2008 ◽  
Vol 53 (No. 4) ◽  
pp. 184-188
Author(s):  
K. Bradáčová
Keyword(s):  
Property Rights ◽  
Agricultural Land ◽  
Slovak Republic ◽  
Supply And Demand ◽  
Income Effect ◽  
Land Market ◽  
Land Price ◽  
Market Prices ◽  
Land Prices ◽  
Land Site

As long as the land market in Slovakia is not completely developed and land market prices introduced, the officially assigned land prices are practically in use. At the present time, land prices should express the supply prices, which cover the income effect of the land site under the socially necessary costs. In this situation, for the temporary period, centrally assigned fixed land prices could represent the effective supply and demand prices in case they correspond to the mentioned conditions. At present, the official prices are used for fiscal purposes and the land property rights.

Sind Marktpreise gerecht?

2000 ◽  
Vol 22 (2) ◽  
Author(s):  
Heiner Michel
Keyword(s):  
Health Care ◽  
Human Rights ◽  
Human Life ◽  
Supply And Demand ◽  
Right To Health ◽  
Social Recognition ◽  
Market Prices ◽  
Right To Health Care ◽  
The Right ◽  
Full Protection

AbstractThis article objects to two major economistic shortcomings of Philippe Van Parijs’s Real Freedom for All: (1) Van Parijs claims that market prices are the best metric for equal real freedom. This is challenged. Market prices admittedly are the best instrument for distributive purposes at hand. They are, however, a means of transport for supply and demand contingendes. Hence market prices are to be considered as an insufficient metric for equal freedom. (2) Van Parijs claims that Real Freedom for All is all there is to social justice. This claim is rejected. Despite its demanding egalitarian ambition, Real Freedom for All fails to protect a flourishing human life. Basic human rights like the right to social recognition and, in part, the right to health care are violated. Curiously even the right to autonomy is in want of full protection. These lacks are caused by the monetarism and the Straightforward market optimism of Real Freedom for All.

A disequilibrium evaluation of public intervention in agricultural credit markets

2017 ◽  
Vol 77 (1) ◽  
pp. 37-49 ◽  
Author(s):  
Todd Hubbs ◽  
Todd Kuethe
Keyword(s):  
Credit Markets ◽  
Supply And Demand ◽  
Excess Demand ◽  
Agricultural Producers ◽  
Public Intervention ◽  
Linear Solution ◽  
Content Type ◽  
Excess Supply ◽  
Solution Algorithms ◽  
Private Credit

Purpose Agricultural producers rely on debt capital to support many functions of their enterprise, yet private credit markets are frequently characterized by an imbalance between supply and demand. As a result, a number of public lending programs exist to mitigate the perceived market failures of private credit markets that serve agricultural producers. The paper aims to discuss these issues. Design/methodology/approach This study uses a structural disequilibrium model to examine the potential for excess demand or supply in the private market for non-real estate farm loans between 1978 and 2014. Findings The model demonstrates that the market is frequently characterized by disequilibrium, fluctuating between periods of excess demand and excess supply. These disequilibrium periods motivate the discussion of public intervention as a policy proposal within the agricultural sector. Originality/value This study uses traditional disequilibrium modeling to evaluate the private credit market for agriculture lending in a manner that has not been attempted previously in the literature. The model uses maximum likelihood methods with non-linear solution algorithms to investigate excess supply and demand in the sector.

An assessment of farmers' willingness to participate in water trading in southern Spain

Water Policy ◽  
2014 ◽  
Vol 17 (3) ◽  
pp. 520-537 ◽  
Author(s):  
Giacomo Giannoccaro ◽  
Manuela Castillo ◽  
Julio Berbel
Keyword(s):  
Irrigation Water ◽  
Supply And Demand ◽  
Market Price ◽  
Southern Spain ◽  
Baseline Scenario ◽  
Willingness To Participate ◽  
Ethical Perspective ◽  
Market Prices ◽  
Drought Conditions ◽  
Equilibrium Market

This study applies contingent valuation to assess farmers' willingness to trade irrigation water. We analyse farmers' willingness to pay for water and their willingness to accept the selling of water through a seasonal market, under both normal rainfall and drought conditions. A survey of 241 farmers (irrigators and non-irrigators) in the Guadalquivir River Basin and in the Mediterranean (Almanzora) Basin in southern Spain is used as a basis to construct the irrigation water supply and demand curves for both basins. Assuming that each basin operates as a single country, an international commerce framework is applied to study inter-basin trading. Results show that there is scope for both intra-basin and inter-basin markets. The equilibrium market price increases from 0.17 EUR/m3 in the baseline scenario to 0.21 EUR/m3 under drought conditions. These results are in line with observed market prices during 2006–2007. We also find a threshold volume under which start-up costs for irrigation infrastructure make it unprofitable for non-irrigators to enter the market. Finally, we conclude that farmers' ethical perspective of considering irrigation water as a non-tradable commodity constrains them from participating in such markets.

scholarly journals prices

2018 ◽  
Author(s):  
Paul Erdkamp
Keyword(s):  
Market Integration ◽  
Supply And Demand ◽  
Price Formation ◽  
Market Conditions ◽  
Market Prices ◽  
Ancient Economy ◽  
Wide Range ◽  
Economic Forces ◽  
Modern Economic ◽  
Insight Into

While our sources mention numerous prices of a wide range of commodities, the question remains to what extent these prices offer insight into the ancient economy. Despite the wealth of data, reliable prices of everyday goods under normal market conditions are rare. The extent to which they can be used to analyze such topics as market integration, living standards, market stability, and inflation is limited. Only regarding Ptolemaic and Roman Egypt do we possess sufficient market prices (rather than imposed prices or valuations) to conduct meaningful analyses. For most of the rest of the empire, the prices—in particular those of everyday goods—are generally too uncertain, too sparse, and too diverse to form a solid basis for economic analysis. It is a valid question, moreover, to what extent prices in the ancient world reflect the interplay of supply and demand according to modern economic theory. Nevertheless, ancient writers depict price levels as depending on the interplay of supply and demand, and market transactions, as narrated in our sources, emphasizing competition and bargaining, make clear that price formation was largely determined by economic forces. Hence, prices fluctuated over time and differed in various places. The authorities tried to keep prices of staple foods low by influencing market conditions, but direct price fixing was rare.

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