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

Citation

Kozhevnikova M & Lange I (2009) Determinants of Contract Duration: Further Evidence from Coal-Fired Power Plants. Review of Industrial Organization, 34 (3), pp. 217-229. https://doi.org/10.1007/s11151-009-9206-3

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.

Keywords
coal; contract duration; regulation; transaction costs; Coal trade Costs; Coal mines and mining

Journal
Review of Industrial Organization: Volume 34, Issue 3