ABSTRACT
In the previous chapters of this textbook the analysis of commodity prices has assumed that buyers and sellers have perfect information when buying and selling from each other. Perfect information means that commodity sellers can seek out buyers with the highest willingness to pay. Conversely, commodity buyers can seek out sellers with the lowest reserve price. Market clearing ensures that sellers with a reserve price below the equilibrium price choose to sell the commodity and buyers with a willingness to pay above the reserve price choose to purchase the commodity. With complete information competitive price discovery is efficient and the collective welfare of market participants is maximized.
