Experimental Examination of a Thin Market: Price Behavior in a Declining Terminal Market Revisited

Abstract

Perceived characteristics of thin markets are described and approaches to furthering their study are suggested. Design features of a laboratory thin market, patterned after a typical livestock marketmg situation, are described. Price bias and variation from a "thick" private negotiation market with 22 traders is compared to that from a "thin" auction market with 8 traders. No systematic price bias was found m any of the markets. Price variation was actually lower in the thin auction market.

The Existence and Implications of Thin Real Estate Market

“…According to [8] and [13] thin market refers to the situation where the number of transaction is low. While, [7] Manuscript states that a thin market exists when there are only a few buyers and a few sellers in the market at the same times.…”

“…According to [13] thin market refers to a market with large numbers of concurrent buyers and sellers but there are few sellers that involved in that market. This is aligned with [6] who stated that thin market is a market with little trading volume and liquidity.…”

“…According to the literature, there are six main implications of thin market. These are price bias, market manipulation, instability of price, data cannot cooperate quickly, difficulty in gathering required information and inconsistent assessment ([1], [2], [3], [9], [12], [13] and [14]). This is summarized in Fiq.…”

“…Other than financial literature, thin market issues are also widely discussed in agriculture market studies. There are few potential implications of thin markets including price bias, market manipulation, instability of price, data cannot cooperate quickly, difficulty in gathering required information and inconsistent assessment ( [1], [2], [3], [9], [12], [13] and [14]).…”

Structural Change in Commodity Markets

“…A similar result is reported in Anderson et al (2007). Nelson and Turner (1995) report that in the context of a market that has evolved from having many buyers and sellers to having only a few buyers, the pricing behaviour in thin markets is not necessarily inferior to that in a larger market. Evolving market structure of several agricultural commodities have led Anderson et al (2007) to conclude that the traditional conception of thin markets, relating primarily to the number of transactions in a given period of time no longer adequately frames the thin market issue.…”