A Note on Price Information in Commodity Markets with Evidence from the Cotton Market

Theory and analysis of price information and its importance have typically assumed that the information is correct. Additionally, most analyses have centered on general price information assuming homogeneous products. This paper examines the implications of incorrect price information on the basis of quality, with evidence from prior research on cotton prices used as an illustration. Results of a conceptual analysis indicate that quality has direct implications on the production and marketing process. Incorrect information on prices of different quality leads to distortions in the market and market inefficiency