Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/103735
Authors: 
Aichele, Markus F.
Year of Publication: 
2014
Series/Report no.: 
University of Tübingen Working Papers in Economics and Finance 75
Abstract: 
Commodity markets are characterized by large volumes of forward contracts as well as high volatility. They are often accused of weak competitive pressure. This article extends the existing literature by analyzing tacit collusion of firms, forward trading and volatility simultaneously. The expected collusive pro t may depart from the monopoly outcome in a volatile market (Rotemberg and Saloner, 1986). Introducing forward trading enables firms to gain the expected monopoly pro t for a broader range of parameters. In contrast to a deterministic market (Liski and Montero, 2006), trading forward in a volatile market may lead to an expected collusive pro t below the monopoly one.
Subjects: 
Industrial organization
Forward trading
Collusion
Energy Markets
JEL: 
L13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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