Do Firms sell forward for Strategic Reasons? An Application to the Wholesale Market for Natural Gas

Building on a model of the interaction of risk-averse frms that compete in forward and spot markets, we develop an empirical strategy to test whether oligopolistic frms use forward contracts for strategic motives, for risk-hedging, or for both. An increase in the number of players weakens the incentives to sell forward for risk-hedging reasons.

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Year of publication:	2010-06-10
Authors:	Eijkel, Remco van ; Moraga, J.L.
Institutions:	Tinbergen Institute
Subject:	market power \| risk-hedging \| forward contracts \| spot market \| over-thecounter trade \| market transparency \| churn rates

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Extent:	application/pdf
Series:	Tinbergen Institute Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	The text is part of a series Tinbergen Institute Discussion Papers Number 10-058/1
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; L13 - Oligopoly and Other Imperfect Markets ; G13 - Contingent Pricing; Futures Pricing ; L95 - Gas Utilities; Pipelines; Water Utilities
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10008838600