By Topic

Economic Models of Decisions with Respect to Contract Structure

Sign In

Cookies must be enabled to login.After enabling cookies , please use refresh or reload or ctrl+f5 on the browser for the login options.

Formats Non-Member Member
$31 $13
Learn how you can qualify for the best price for this item!
Become an IEEE Member or Subscribe to
IEEE Xplore for exclusive pricing!
close button

puzzle piece

IEEE membership options for an individual and IEEE Xplore subscriptions for an organization offer the most affordable access to essential journal articles, conference papers, standards, eBooks, and eLearning courses.

Learn more about:

IEEE membership

IEEE Xplore subscriptions

1 Author(s)

Choices of common contract structures in markets characterized by demand uncertainty and high fixed costs are examined in this paper through the formulation and analysis of a static single-product model of two-party ventures undertaken by utility of profit maximizers holding generalized probabilistic beliefs. It is shown that the parties' broad attitudes towards risk, the parties' possible differences in probabilistic beliefs, and the likely transaction costs Involved in making contracts, often decisively Influence the choice of contract structure. It is also argued that the best public policy towards joint ventures in the markets of Interest is a policy that encourages the operation of a free market; for there are no "optimal" contractual interactions, and the various probabilistic and value differences surrounding the provision of products are therefore most effectively resolved in the marketplace.

Published in:

Systems, Man and Cybernetics, IEEE Transactions on  (Volume:10 ,  Issue: 9 )