Determinants of Contract Duration: Further Evidence from Coal-Fired Power Plants

Determinants of Contract Duration: Further Evidence from Coal-Fired Power Plants Transactions cost theory predicts that the availability of alternatives is one of the determinants of contract duration. Over the last 20 years, the coal market has seen many regulatory changes that have generally increased the number of alternatives in the process of procuring coal. In this paper data from long-term coal contracts for electricity generation signed before 1999 are used to estimate the effect of increasing alternatives on contract duration. Empirical results tend to match transactions cost theory that increased alternatives reduces contract duration. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Industrial Organization Springer Journals

Determinants of Contract Duration: Further Evidence from Coal-Fired Power Plants

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Publisher
Springer Journals
Copyright
Copyright © 2009 by Springer Science+Business Media, LLC.
Subject
Economics; Industrial Organization; Microeconomics
ISSN
0889-938X
eISSN
1573-7160
D.O.I.
10.1007/s11151-009-9206-3
Publisher site
See Article on Publisher Site

Abstract

Transactions cost theory predicts that the availability of alternatives is one of the determinants of contract duration. Over the last 20 years, the coal market has seen many regulatory changes that have generally increased the number of alternatives in the process of procuring coal. In this paper data from long-term coal contracts for electricity generation signed before 1999 are used to estimate the effect of increasing alternatives on contract duration. Empirical results tend to match transactions cost theory that increased alternatives reduces contract duration.

Journal

Review of Industrial OrganizationSpringer Journals

Published: Jun 9, 2009

References

  • The nature of the firm
    Coase, R.

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