Cobweb price dynamics under the presence of agricultural futures market: theoretical analysis

摘要: The basic thrust of the present paper is to demonstrate that agricultural futures markets may be expected neutralize long-term price destabilizing forces. This aspect has been examined within broad frame ‘cobweb’ expectation-formation behavior. analysis purely theoretical. two relations conventional cobweb model, namely lagged supply function and absence inventories, have retained. Additionally, it assumed hedgers (commodity producers buyers) pledge a part their target quantities in market during early period (crop-year) depending on hedging propensities. inclusion produces some significant results. One, found generate only one type pattern (convergent time path price) even as commodity demand–supply ratio assumes more than unity value over certain range. Two, speed with which converge equilibrium positively related propensity responsiveness speculators.