Commodity futures markets are often thought of as good examples of perfectly competitive markets.
However, there are many commodities that are produced in concentrated industries and traded on large
commodity exchanges. Nickel, aluminum, lead, zinc, tin, oil, and coffee are some examples. This thesis
examines the effects of concentrated production on output and prices in these markets. The analysis includes
the possibility that firms can trade futures contracts for their output and also store their output. A dynamic
model is developed that examines how a duopoly could use futures trading and storage strategically to
affect outcomes in subsequent periods. I examine futures trading for a perishable good and storage with no
futures trading separately in order to highlight the potential stategic use of these activities on their own.
I also analyse a model in which both futures trading and storage are allowed. I show that both futures
positions and storage would be used strategically by the duopolists, in contrast to the results of previous
work that used two-period models only. By allowing for uncertainty in the form of demand and cost shocks,
the solution to the model can be used to provide some implications for correlations among industry level
variables. These correlations are examined for the world lead, zinc, and copper industries. Weak support
for the model is found, however, estimation of the vector auotregression implied by the model suggests the
model in its present form is unable to fit the data very well.
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:BVAU.2429/6213 |
| Date | 05 1900 |
| Creators | Thille, Henry |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Relation | UBC Retrospective Theses Digitization Project [http://www.library.ubc.ca/archives/retro_theses/] |
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