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Public Reporting of Fed Cattle Grid Prices: Policy Reform Consequences

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Abstract

Mandatory livestock price reporting was implemented in April 2001. Empirical evidence indicates a significant change in volatility occurred in publicly reported fed cattle grid premiums and discounts after its implementation. Empirical analysis of grid premiums and discounts across the pre-and post-reform periods indicates that increased transparency is compatible with either an increase or a decrease in price volatility in the post-MPR period. Furthermore, it appears that the public price reporting system for weekly grid premiums and discounts failed to provide an adequate level of transparency prior to the implementation of price reporting reforms. Our methodology extends the literature on the use of volatility measures for investigating issues associated with market transparency. This extension can be applied to the development of volatility measures for monitoring the price reporting behavior of firms.

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