Path: utzoo!utgpu!jarvis.csri.toronto.edu!cs.utexas.edu!samsung!brutus.cs.uiuc.edu!lll-winken!decwrl!shelby!eos!ptolemy!hanson From: hanson@ptolemy.arc.nasa.gov (Robin Dale Hanson) Newsgroups: comp.society.futures Subject: Re: Futures markets for semiconductors ? Message-ID: <4287@bayes.ptolemy.arc.nasa.gov> Date: 6 Mar 90 17:46:24 GMT References: <9003041927.AA18921@world.std.com> Reply-To: hanson@bayes.arc.nasa.gov.UUCP (Robin Hanson) Organization: NASA Ames Research Center, Moffett Field, CA Lines: 22 In <9003041927.AA18921@world.std.com> Barry Shein writes regarding Futures markets for semiconductors: > Actually, I think there have been such markets albeit informal. Apple > supposedly signed futures contracts for months in advance ... > Anyhow, there's nothing all that magic about futures markets other > than the SEC getting into things when the brokers start bringing in > the public. Maybe it's not real until the prices are listed in the > back of the newspaper? Actually, having an organized market with public prices, standardized commodities, and guaranteed delivery is a substantial improvement over separate negotiations using whatever information the parties can glean. Transaction costs are substantially reduced, including those due to strategic behavior, distrust, and the need to research prices. This makes it easier for speculators to trade and rationalize prices. This added participation further decreases transaction costs due to market illiquidity. (I won't defend the SEC, however.) We're talking Markets 101 here. Perhaps followup should go to sci.econ. Robin Hanson hanson@ptolemy.arc.nasa.gov (or hanson@charon.arc.nasa.gov) 415-604-3361 MS244-17, NASA Ames Research Center, Moffett Field, CA 94035 415-651-7483 47164 Male Terrace, Fremont, CA 94539