How Market Efficiency and the Theory of Storage Link Corn and Ethanol Markets
| dc.creator | Mallory, Mindy L. | |
| dc.creator | Hayes, Dermot J. | |
| dc.creator | Irwin, Scott H. | |
| dc.date | 2017-04-01T19:57:09Z | |
| dc.date.accessioned | 2026-07-09T05:27:06Z | |
| dc.description | In this article we use the theories of market efficiency and supply of storage to develop a conceptual link between the corn and ethanol markets and explore statistical evidence for the link. We propose that a long-run no-profit condition is established in distant futures markets for ethanol, corn, and natural gas and then use the theory of storage to define an inter-temporal equilibrium among these prices. The relationship shows that under certain conditions, future price expectations will influence current spot prices and that a short-term relationship between input and output prices will exist. This short-term relationship will contain fixed costs. We demonstrate validity of the theory using a structural price model and then by means of time-series techniques. | |
| dc.identifier | doi:10.22004/ag.econ.97611 | |
| dc.identifier | https://ageconsearch.umn.edu/record/97611/files/10-WP_517.pdf | |
| dc.identifier | http://ageconsearch.umn.edu/record/97611 | |
| dc.identifier.uri | http://hdl.handle.net/123456789/563815 | |
| dc.language | eng | |
| dc.publisher | ||
| dc.source | http://ageconsearch.umn.edu/record/97611 | |
| dc.title | How Market Efficiency and the Theory of Storage Link Corn and Ethanol Markets | |
| dc.type | Text |