Feeder Cattle Price Slides

Document Type

Article

Journal/Book Title/Conference

Journal of Agricultural and Resource Economics

Volume

26

Issue

1

Publication Date

7-2001

First Page

291

Last Page

308

Abstract

A theoretical model is developed to explain the economics of determining price slides for feeder cattle. The contract is viewed as a dynamic game with continuous strategies where the buyer and seller are the players. The model provides a solution for the price slide that guarantees an unbiased estimate of cattle weight. An empirical model using Superior Livestock Auction (SLA) data shows price slides used are smaller than those needed to cause the producer to give unbiased estimates of weight. Consistent with the model's predictions, producers slightly underestimate cattle weights.

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