Committed Procurement in Privately Negotiated Markets: Evidence from Laboratory Markets

14 Pages Posted: 15 Apr 2020

See all articles by Chris T. Bastian

Chris T. Bastian

University of Wyoming

Christopher T. Bastian

University of Wyoming

Dale J. Menkhaus

University of Wyoming

Owen R. Phillips

University of Wyoming

Date Written: October 2013

Abstract

Previous research suggests an increase in committed procurement can result in lower cash market prices for livestock. There is a paucity of research that ascertains prices received by market agents trading in a prior bargaining session via alternative marketing arrangements versus those who have not. We use laboratory market experiments to analyze the potential impacts of committed procurement on privately negotiated transactions when some traders have two windows of negotiation and others have one. Results illustrate that those who do not engage in prior trading are at a bargaining disadvantage due to matching and inventory loss risks.

Keywords: alternative marketing agreements, captive supplies, inventory loss risk

Suggested Citation

Bastian, Chris T. and Bastian, Christopher T. and Menkhaus, Dale J. and Phillips, Owen R., Committed Procurement in Privately Negotiated Markets: Evidence from Laboratory Markets (October 2013). American Journal of Agricultural Economics, Vol. 95, Issue 5, pp. 1122-1135, 2013, Available at SSRN: https://ssrn.com/abstract=3573670 or http://dx.doi.org/10.1093/ajae/aat051

Chris T. Bastian (Contact Author)

University of Wyoming ( email )

Box 3434 University Station
Department of Agricultural and Applied Economics
Laramie, WY 82071
United States
(307) 766-4377 (Phone)

Christopher T. Bastian

University of Wyoming

Dale J. Menkhaus

University of Wyoming ( email )

Box 3434 University Station
Department of Applied Agricultural Economics
Laramie, WY 82071
United States
307-766-5128 (Phone)
307-766-5544 (Fax)

Owen R. Phillips

University of Wyoming

Box 3434 University Station
Laramie, WY 82070
United States

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