Mitigating Contractual Hazards: Unilateral Options and Contract Length
研究长期合同的设计与期限权衡，以天然气井口价格管制为例，分析非价格竞争如何扭曲合同激励、缩短合同期限，并提出评估合同效率的方法。
In this article we consider the ways in which the desire for efficient, low-cost adaptation to change influences the tradeoff between the design and duration of long-term contractual relationships. We examine the distortions in contract terms occasioned by nonprice competition for natural gas in the presence of wellhead price regulation. Deviations from optimal contract incentives significantly raise the cost of being bound to long-term agreements and shorten the duration of contracts. The approach we adopt suggests a method for empirically assessing the efficiency of alternative contracting practices and legal standards.