Risk, and Market Participant Behavior in the U.S. Slaughter Cattle Market

Document Type

Article

Journal/Book Title/Conference

Journal of Agricultural and Resource Economics

Volume

20

Issue

1

Publication Date

1995

First Page

22

Last Page

31

Abstract

Incomplete information generates uncertainty for market participants in the slaughter-cattle market. Buyer and seller behavior in the presence ofthat uncertainty is examined. Statisti- cally significant risk premiums are charged by packers when buying slaughter cattle on either a live- or dressed-weight basis compared to buying on a grade-and-yield basis. Pratt- Arrow risk-aversion coefficients are calculated for buyers and these remain constant over all marketing methods. Sellers market cattle under all three marketing methods, suggesting producers1 attitudes toward risk (risk-aversion coefficients) vary.

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