Taming Transaction Costs, Risk, and Uncertainty in Global Production and Financial Networks

The Case of Wheat Futures Markets

Bibliographic Data

ID3138529
AuthorsCristina Di Luigi (Bank of Italy), Gordon L Clark (0000-0003-3159-7674, University of Oxford), Daniel Wojcik (0000-0003-2158-284X, National University of Singapore), Dariusz Wójcik (0000-0002-4200-3432, National University of Singapore)
Year2025
Volume101
Issue4
Pages268-294
Publication date2025-07-04
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueEconomic Geography (JOURNAL)
Journal identifiersISSN: 0013-0095 • E-ISSN: 1944-8287
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00130095.2025.2543505
OpenAlexW4414198470
LanguageEN
References cited60

We apply a novel conceptual framework that integrates the global production network (GPN) and global financial network (GFN) approaches combined with the notions of transaction costs, risk, and uncertainty to shed new light on commodities markets, using wheat futures markets as a case study. We critically assess three major trends characterizing the evolution of wheat futures trading since 2000: horizontal and vertical integration, the establishment of a new EU price benchmark, and heightened volatility. The focus of this article is the infrastructural backbone of the market, which includes trading houses, warehouses, derivatives exchanges, central counterparties, and investment banks. Conceptually, it is argued that the wheat global production and financial network (GPFN) can be conceived as a means of taming transaction costs, risk, and uncertainty. These concepts are crucial for understanding the network’s configuration and evolution, explaining increasing concentration in a limited number of key nodes and the existence of interlinkages not only within but also across the wheat GPN and GFN. Empirically, it is shown that Paris has become a key financial center for trading wheat futures flanking (if not supplanting) Chicago—a notable development given the typically slow pace of change in GPFNs

Database transaction · Financial market · Futures contract · Futures market · Production (economics) · Transaction cost · Economic Theory and Policy · Global trade and economics · Market Dynamics and Volatility

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Open DOIOpen Access