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Pricing Efficiency in Centralized and Noncentralized Markets

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  • Steven T. Buccola

Abstract

Pricing efficiency in centralized markets is compared with that in noncentralized markets. On the basis of a price formation model, centrally discovered prices are hypothesized to adjust more slowly to equilibrium, but to have lower unpredictable variability, than noncentrally discovered prices. These hypotheses are borne out strongly in market experiments. Mean-squared error is found to be lower in centralized than in noncentralized trading, suggesting centralized markets are the more price efficient.

Suggested Citation

  • Steven T. Buccola, 1985. "Pricing Efficiency in Centralized and Noncentralized Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 583-590.
    • Handle: RePEc:oup:ajagec:v:67:y:1985:i:3:p:583-590.
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    File URL: http://hdl.handle.net/10.2307/1241079
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    Cited by:

    1. Buccola, Steven T., 1989. "Pricing Efficiency In Agricultural Markets: Issues, Methods, And Results," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-11, July.
    2. Fisher, Ann & Wheeler, William J. & Zwick, Rami, 1993. "Experimental Methods in Agricultural and Resource Economics: How Useful are They?," Agricultural and Resource Economics Review, Cambridge University Press, vol. 22(2), pages 103-116, October.
    3. P. K. Kwakyi & J. E. Epperson & S. M. Fletcher & D. H. Carley, 1989. "Probit analysis of market participants' attitudes toward selected market alternatives for us farmers' stock peanuts," Agribusiness, John Wiley & Sons, Ltd., vol. 5(2), pages 107-119.
    4. Turner, Steven C., 1987. "Rumblings from Communication Theory and A More Complete Evaluative Framework for Price Discovery Mechanisms," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 269967, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Ngeleza Guyslain K. & Robinson Elizabeth J.Z., 2013. "Cartels and Rent Sharing at the Farmer–Trader Interface: Evidence from Ghana’s Tomato Sector," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 11(1), pages 15-30, January.
    6. Schroeder, Ted C. & Ward, Clement E. & Mintert, James & Peel, Derrell S., 1998. "Beef Industry Price Discovery: A Look Ahead," Staff Papers 232524, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    7. Roger A. Hinson & Steven C. Turner & John R. Brooker, 1995. "Transactions methods among US wholesale nurseries," Agribusiness, John Wiley & Sons, Ltd., vol. 11(2), pages 147-154.
    8. J. E. Epperson & M. H. So & S. M. Fletcher & D. H. Carley, 1988. "Profile analysis of market participants' attitudes toward selected market alternatives for US shelled peanuts," Agribusiness, John Wiley & Sons, Ltd., vol. 4(5), pages 433-452.
    9. Waichman, Israel & Ness, Christiane, 2012. "Farmers’ performance and subject pool effect in decentralized bargaining markets," Economics Letters, Elsevier, vol. 115(3), pages 366-368.
    10. Menkhaus, Dale J. & Yakunina, Alla V. & Phillips, Owen R., 2001. "Bilateral Trading And The Curse Of Knowledge: An Experimental Economics Study," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36127, Western Agricultural Economics Association.
    11. Phillips, Owen R. & Menkhaus, Dale J., 2006. "The Culture of Private Negotiation: Price Drift in Bilateral Bargaining," 2006 Annual meeting, July 23-26, Long Beach, CA 21168, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Rosa, Franco & Vasciaveo, Michela, 2012. "Volatility in US and Italian agricultural markets, interactions and policy evaluation," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122530, European Association of Agricultural Economists.
    13. 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.
    14. Schroeder, Ted C. & Goodwin, Barry K., 1990. "Regional Fed Cattle Price Dynamics," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(1), pages 1-12, July.

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