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Futures markets: Their purpose, their history, their growth, their successes and failures by Dennis W. Carlton is a Economics, Econometrics and Finance article available to read on EtoBox.

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This prediction must be qualified by the results of Anderson and Danthine (1983)and Hirschlerfer (1983), both of whom show that the elasticities of supply and demand are relevant in determining the risk premium. In the case of fairly inelastic demand, the statement in the text is correct. "If a futures market does not develop, an alternative is for corporations, owned by many shareholders, to develop as buyers or sellers and thereby help spread the risk. This and related points are developed further in Section 11. HISTORY OF FUTURES MARKEI'S "See Anderson and Danthine (1983) and Hirshleifer (1983). '\*It may make sense to set up a futures market not in prices but in quantities. Using an approach similar to Weitzman (1974), one could ascertain whether a futures market based on price or one based on quantity is better for minimizing risk. The Coffee Sugar and Cocoa Exchange has recently proposed such nonprice futures based on number of housing starts, new car sales, and corporate profits. I3That is, there should be little basis risk. The basis is defined as the difference between the futures price and the spot price. If the basis is unchanged over time, a futures market can provide a

Who reads Futures markets: Their purpose, their history, their growth, their successes and failures?

Author

Dennis W. Carlton

Publisher

John Wiley and Sons; Wiley (John Wiley & Sons); John Wiley & Sons Inc.; Wiley (ISSN 0270-7314)

Published

1984

Language

EN

Field

Economics, Econometrics and Finance (Social Sciences)