Review of Financial Studies Vol. 38 No. 7 2025
Real Effects of Centralized Markets: Evidence from Steel Futures
open access
Abstract
I study the real effects of centralized derivative markets using the staggered introduction of futures contracts for different steel products in the United States. Employing a difference-in-differences strategy, I find that the arrival of centralized futures markets improves price transparency and risk management in the underlying product market: price dispersion decreases and steel producers increase their hedging activity. Moreover, market share is reallocated toward low-cost producers, while product prices, producers’ profits, and valuations decrease. Overall, the results indicate that centralized futures markets foster competition in the product market.
- DOI
- 10.1093/rfs/hhaf011
- Volume
- 38
- Issue
- 7
- Pages
- 2140-2181
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref