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The Effect of the Livestock Mandatory Reporting Act on Market Transparency and Grid Price Dispersion

Published online by Cambridge University Press:  15 September 2016

Scott W. Fausti
Affiliation:
Department of Economics at South Dakota State University in Brookings, South Dakota
Bashir A. Qasmi
Affiliation:
Department of Economics at South Dakota State University in Brookings, South Dakota
Jing Li
Affiliation:
Department of Economics at South Dakota State University in Brookings, South Dakota
Mathew A. Diersen
Affiliation:
Department of Economics at South Dakota State University in Brookings, South Dakota
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Abstract

The Livestock Mandatory Reporting Act (MPR) of 1999 was implemented in April 2001. Empirical evidence indicates a significant change in intra-week price dispersion associated with publicly reported fed cattle grid premiums and discounts occurring after MPR implementation.

The research objective is to evaluate the effect of increased market transparency resulting from implementation of MPR, on grid intra-week premium and discount dispersion levels. Empirical results suggest that increased transparency is compatible with intra-week dispersion levels increasing. Increased dispersion suggests that during the pre-MPR period weekly premium and discount data may have been drawn from a non-representative sample. From the empirical evidence, it is concluded that reform of the livestock price-reporting system appears to have been necessary in the case of publically reported grid premiums and discounts.

Type
Contributed Papers
Copyright
Copyright © 2010 Northeastern Agricultural and Resource Economics Association 

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