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Experimental Simulation Of Public Information Impacts On Price Discovery And Marketing Efficiency In The Fed Cattle Market

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  • Anderson, John D.
  • Ward, Clement E.
  • Koontz, Stephen R.
  • Peel, Derrell S.
  • Trapp, James N.

Abstract

Federal budgetary pressures raise questions regarding the importance of public market information. This study assesses the impact of price discovery and production efficiency of reducing public price and quantity information. The amount and type of information provided to Fed Cattle Market Simulator (FCMS) participants was varied by periodically withholding current and weekly summary information according to a predetermined experimental design. Results show that reducing information increased price variance and decreased marketing efficiency; that is, more cattle were delivered at weights deviating from 1,150 pounds- the least-cost marketing weight in the simulator. These factors, which increase costs, make the industry less competitive.

Suggested Citation

  • Anderson, John D. & Ward, Clement E. & Koontz, Stephen R. & Peel, Derrell S. & Trapp, James N., 1998. "Experimental Simulation Of Public Information Impacts On Price Discovery And Marketing Efficiency In The Fed Cattle Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(1), pages 1-17, July.
    • Handle: RePEc:ags:jlaare:31170
    DOI: 10.22004/ag.econ.31170
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    Cited by:

    1. Trisha R. Shrum & William R. Travis, 2022. "Experiments in ranching: Rain‐index insurance and investment in production and drought risk management," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1513-1533, September.
    2. Christopher N. Boyer & Charles C. Martinez & Joshua G. Maples & Justin Benavidez, 2023. "Price ranges from fed cattle negotiated cash sales," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 45(3), pages 1659-1671, September.
    3. Fausti, Scott W. & Diersen, Matthew A. & Qasmi, Bashir A., 2007. "Public Price Reporting in the Cash Market for Live Cattle: A Spatial Market Approach," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), pages 1-13, October.
    4. Schroeder, Ted C. & Ward, Clement E., 2000. "Price Discovery Issues And Trends In Cattle And Hog Markets," 2000 Annual Meeting, June 29-July 1, 2000, Vancouver, British Columbia 36418, Western Agricultural Economics Association.
    5. Fausti, Scott W. & Keimig, R. & Diersen, Matthew A. & Kim, Han & Santos, Joseph M., 2002. "Mandatory Versus Voluntary Price Reporting: An Empirical Investigation Of The Market Transparency Controversy," Economics Staff Papers 32024, South Dakota State University, Department of Economics.
    6. Fausti, Scott W. & Diersen, Matthew A., 2004. "The Voluntary Reporting System's Ability to Provide Price Transparency in the Cash Market for Dressed Steers: Evidence from South Dakota," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(3), pages 1-14, December.
    7. Fausti, Scott W. & Qasmi, Bashir A. & Diersen, Matthew A., 2007. "Public Reporting of Fed Cattle Grid Prices: Policy Reform Consequences," Economics Staff Papers 7297, South Dakota State University, Department of Economics.
    8. William W. Wilson & Bruce L. Dahl, 2004. "Transparency and Bidding Competition in International Wheat Trade," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(1), pages 89-105, March.
    9. Anderson, John D. & Hudson, Darren & Harri, Ardian & Turner, Steven C., 2007. "A New Taxonomy of Thin Markets," 2007 Annual Meeting, February 4-7, 2007, Mobile, Alabama 34826, Southern Agricultural Economics Association.
    10. Fausti, Scott W. & Diersen, Matthew A., 2005. "Price Transparency in the Voluntary Price Reporting System for Live Cattle: Theory and Empirical Evidence from South Dakota," Economics Staff Papers 32027, South Dakota State University, Department of Economics.
    11. Ward, Clement E. & Koontz, Stephen R. & Peel, Derrell S. & Trapp, James N., 2001. "Lessons Learned From Research With The Fed Cattle Market Simulator," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36181, Western Agricultural Economics Association.
    12. Lyford, Conrad P. & Hicks, R. Todd & Ward, Clement E. & Trapp, James N. & Peel, Derrell S., 2001. "The Effect Of Contracting On Pricing Dynamics In The Fed Cattle Market: An Experimental Simulation Approach," 2001 Annual meeting, August 5-8, Chicago, IL 20535, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Fausti, Scott W. & Diersen, Matthew A., 2003. "Did The Voluntary Price Reporting System Fail To Provide Price Transparency In The Cash Market For Dressed Steers: Evidence From South Dakota," Economics Staff Papers 32012, South Dakota State University, Department of Economics.
    14. Fausti, Scott W. & Diersen, Matthew A., 2003. "Did The Voluntary Price Reporting System Fail To Provide Price Transparency In The Cash Market For Dressed Steers: Evidence From South Dakota," Economics Staff Papers 32012, South Dakota State University, Department of Economics.
    15. Koontz, Stephen R., 2012. "Impacts of "Right of First Refusal" on Competitiveness of Fed Cattle Markets: Results from an Economic Experiment," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123875, Agricultural and Applied Economics Association.
    16. Carlberg, Jared G. & Ward, Clement E., 2001. "A Partial-Adjustment, Mixed Linear Model Of Price Discovery In An Experimental Market For Fed Cattle," 2001 Annual meeting, August 5-8, Chicago, IL 20598, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Clement E. Ward & Jong-In Lee, 2002. "Impacts from meatpacking firm mergers in an experimental market," Agribusiness, John Wiley & Sons, Ltd., vol. 18(2), pages 247-260.
    18. Nicols, Panos & Ahmadi-Esfahani, Fredoun Z., 2009. "Are Australian wholesale vegetable markets LOOPy?," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47618, Australian Agricultural and Resource Economics Society.
    19. Diersen, Matthew A., 2002. "Gleaning Information From Mandatory Livestock Price Reporting," Economics Staff Papers 32017, South Dakota State University, Department of Economics.
    20. Lusk, Jayson L., 2016. "From Farm Income to Food Consumption: Valuing USDA Data Products," C-FARE Reports 266593, Council on Food, Agricultural, and Resource Economics (C-FARE).
    21. Koontz Stephen R & Ward Clement E, 2011. "Livestock Mandatory Price Reporting: A Literature Review and Synthesis of Related Market Information Research," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 9(1), pages 1-33, July.
    22. Jared G. Carlberg & Robert J. Hogan & Clement E. Ward, 2009. "Game theory application to Fed Cattle procurement in an experimental market," Agribusiness, John Wiley & Sons, Ltd., vol. 25(1), pages 56-69.
    23. Tione, Sarah Ephridah, 2011. "Analysis of Effectiveness of Modern Information and Communication Technologies on Maize Marketing Efficiency in Lilongwe and Dedza Districts and Selected Markets of Malawi," Research Theses 198525, Collaborative Masters Program in Agricultural and Applied Economics.

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    Demand and Price Analysis; Marketing;

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