Strategic forward contracting and observability

摘要: Abstract Recently, Allaz (1992) characterized strategic and hedging incentives for entering forward contracts in a two-stage duopoly setting under the implicit assumption that positions are publicly observable. However, credible disclosure of such is, at best, costly subject to noise. Our purpose this paper is examine effects observability on interdependency between behavior. First, focusing an Allaz-type with Cournot conjectures both stages, we show if unobservable motive not present, i.e., risk neutrality, then incentive disappears. In fact, contrary Allaz, each producer strictly prefers engage contracting. given producers contracting only hedge, but also exploit awareness by their rival. case, they behave strategically notwithstanding absence observability. We extend analysis beyond Allaz's consider cases which uncertainty relates cost resolution follows rather than precedes production. When resolved before production decisions made, induces opposite direction those motivated more so Lastly, when after production, disappears relevant financial reporting practices governing contracts.