A Partial-Adjustment, Mixed Linear Model Of Price Discovery In An Experimental Market For Fed Cattle
The Fed Cattle Market Simulator (FCMS) was developed by a team of researchers at Oklahoma State University to aid in understanding the forces that influence price discovery in the fed cattle market. Participants in the FCMS play the role of feedlot marketing managers and packing plant procurement agents, and trade paper pens of cattle in the experimental market. Previous research with the FCMS has not attempted to capture the dynamic nature of the price discovery process; this paper uses a partial-adjustment approach to accomplish that goal. A mixed linear model is used to accommodate both fixed and random effects in the data. Results show that the transaction price adjusts only sixteen percent on a week-by-week basis to its desired level. As such, the price discovery process in the experimental market is said to be characterized by slow adjustment, due in part to biological lags in the beef supply chain. This result will be useful in enhancing understanding of the real fed cattle market.
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- Peter Kennedy, 2003. "A Guide to Econometrics, 5th Edition," MIT Press Books, The MIT Press, edition 5, volume 1, number 026261183x, June.
- Matthey, Holger & Royer, Jeffrey S., 1999. "Testing The Impact Of Corporate Farming Laws On Hog Industry Growth: A Partial Adjustment Approach," 1999 Annual meeting, August 8-11, Nashville, TN 21697, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Anderson, John D. & Ward, Clement E. & Koontz, Stephen R. & Peel, Derrell S. & Trapp, James N., 1998. "Experimental Simulation Of Public Information Impacts On Price Discovery And Marketing Efficiency In The Fed Cattle Market," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
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