Commodity price volatility: an evolving principal–agent problem

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

This chapter analyses the changing dynamics within commodity markets and increasing price volatility using a principal–agent framework. Adopting this more micro-perspective helps to shed light on the role of informational
asymmetries within trading relationships and how these may be influenced by contractual arrangements. More fundamentally, this chapter reflects on how the fragmentation of production processes within commodity markets has
influenced the transmission of information. In some cases, this has increased the opportunities for opportunistic behaviour. Within the context of agricultural commodity markets, the chapter reflects on the interactions between four
entities: institutions, governments, markets and individuals. To address some of the challenges that may result from information asymmetries, a number of options to advance compatibility of incentives are identified, including greater
consideration of contractual arrangements, price-risk management instruments and the creation of commodities exchanges within producing countries.
Original languageEnglish
Title of host publicationFuture Fragmentation Processes
Subtitle of host publicationEffectively Engaging with the Ascendancy of Global Value Chains
EditorsJodie Keane, Roland Baimbill-Johnson
Place of PublicationLondon
PublisherCommonwealth Secretariat
Chapter7
Pages79-88
Number of pages10
ISBN (Electronic)978-1-84859-960-4
ISBN (Print)978-1-84929-166-8
Publication statusPublished - 6 Aug 2017

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Struthers, J. (2017). Commodity price volatility: an evolving principal–agent problem. In J. Keane, & R. Baimbill-Johnson (Eds.), Future Fragmentation Processes: Effectively Engaging with the Ascendancy of Global Value Chains (pp. 79-88). Commonwealth Secretariat. https://books.thecommonwealth.org/future-fragmentation-processes-paperback