speculators are capital constrained, and commodity producers have hedging demands for commodity futures. Increases (decreases) in … producers' hedging demand (speculators' risk-capacity) increase hedging costs via price-pressure on futures, reduce producers … associated with producer hedging demand rises when speculative activity reduces. We conclude that limits to financial arbitrage …

This paper uses a dynamic optimization model to estimate the welfare gains of hedging against commodity price risk for … commodity-exporting countries. We show that the introduction of hedging instruments such as futures and options enhances …

We study a firm that justifies its novel use of equity derivatives as a cash-flow hedging strategy. Our purpose is to … hedging concepts articulated by Froot, Scharfstein and Stein (1993). In applying the theory to practice, there are lessons for …