Hedging pressure and speculation in commodity markets

  • Ivar Ekeland
  • Delphine Lautier
  • Bertrand Villeneuve
Research Article


We propose a micro-founded equilibrium model to examine the interactions between the physical and the derivative markets of a commodity. This model provides a unifying framework for the hedging pressure and storage theories. The model shows a variety of behaviors at equilibrium that can be used to analyze price relations for any commodity. Further, through a comparative statics analysis, we precisely identify the losers and winners in the financialization of the commodity markets. Therefore, this paper clarifies the political economy of regulatory issues, like speculators’ influence on prices.


Equilibrium model Commodity Speculation Regulation Futures markets 

JEL Classification

D4 G13 Q02 



The authors acknowledge conversations with Steven Baker, Bruno Biais, Eugenio Bobenrieth, Alexander Guembel, Roger Guesnerie, Jeffrey Harris, Ulrich Horst, Alejandro Jofre, Larry Karp, Sophie Moinas, Marion Oury, Andreas Rathgeber, Michel Robe, Jean-Charles Rochet, and Brian Wright; remarks from René Carmona, Gabrielle Demange, and Sven Rady; and comments from audiences in Paris (FIME Research Initiative, Chair Finance and Sustainable Development, ACPR, CEMAP, ENSTA and Mines ParisTech), ETH Zurich, Montreal (IAES), Toulouse School of Economics, Santiago de Chile (CMM), Los Angeles (IPAM at UCLA), Lyon (AFFI and ISFA), Bonn (Haussdorf Center for Mathematics), Toronto (Fields Institute), Milan (Bocconi University), Cachan (École Normale Supérieure), Florence (Summer school on commodities) and Washington D.C. (American University). This article is based on work supported by the Chair Finance and Sustainable Development, the FIME Research Initiative and the MIMO Research Initiative, all at the Foundation “Europlace Institute of Finance.”


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Université Paris-Dauphine, PSL Research UniversityParisFrance

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