grid pricing, national beef quality audit, public livestock price reporting, beef carcass quality
The ability of the grid marketing system for fed cattle to provide an efficient price transmission mechanism is investigated. Nerlove' s (1958) adaptive expectations approach is adopted to model the relationship between grid premiums (discounts) and the weekly relative supply of carcass quality attributes. Linear regression techniques are used to estimate Nerlove's supply response function. Granger Causality tests are conducted to investigate the relationship between grid premiums (discounts) and the relative supply of carcass quality attributes. Regression estimates and the Granger Causality tests provide empirical support for the 2005 National Beef Quality Audit call for clearer market signals.
Department of Economics, South Dakota State University
Number of Pages
Fausti, Scott; Qasmi, Bashir; and Li, Jing, "Grid Pricing: An Empirical Investigation of Market Signal Clarity" (2010). Economics Staff Paper Series. 196.