Danau, D., 2009. A note on fixed and flexible-term contracts. Economics Bulletin, 29 (2), pp. 964-975.
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Official URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB...
Engel et al. (1997 2001 2007) have proposed flexible-term contracts as a solution to suboptimal renegotiation of public-private partnerships. We show that whenever the uncertainty lasts over more than two periods, flexible-term contracts have a drawback. The expected duration of a flexible-term contract can be higher than the (certain) duration of a fixed-term contract, the difference being directly proportional to the volatility of the project.
|Subjects:||Social Sciences > Economics|
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|Deposited On:||24 Mar 2011 10:51|
|Last Modified:||15 Mar 2013 04:48|
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