University of Illinois Urbana-Champaign

Hedging Revisited: Resolving Contractual Conflict

Pennings, Joost M.E.; Leuthold, Raymond M.

Content Files
ofor00-01.pdf

Permalink

https://hdl.handle.net/2142/4020

Description

Title
Hedging Revisited: Resolving Contractual Conflict
Author(s)
  • Pennings, Joost M.E.
  • Leuthold, Raymond M.
Issue Date
2000-01
Keyword(s)
  • futures
  • computer-guided study
  • hedging
Date of Ingest
2008-03-17T19:48:39Z
Abstract
This paper develops an alternative view on the motivation to hedge. A conceptual model shows how hedging facilitates contract relationships between firms and can solve conflicts between firms. In this model, firms’ contract preferences, level of power and conflicts in contractual relationships are driving usage of futures contracts. The model shows how using futures markets can provide a jointly preferred contracting arrangement, thereby enhancing relationships between firms. The robust nature of the conceptual model is empirically examined through a computer-guided study of various firms.
Publisher
Office for Futures and Options Research, Department of Agricultural Economics, College of Agricultural, Consumer, and Environmental Sciences at the University of Illinois at Urbana-Champaign
Series/Report Name or Number
OFOR Working Paper Series, no. 00-01
Type of Resource
text
Genre of Resource
Working / Discussion Paper
Language
en
Permalink
http://hdl.handle.net/2142/4020

Owning Collections

OFOR Working Paper Series PRIMARY