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Determinants of contract completeness: An environmental regulatory application

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  • Kosnik, Lea-Rachel

Abstract

There is a tradeoff that must be addressed any time a contract is written; whether or not to make a contract flexible but incomplete or rigid but comprehensive. This paper investigates the completeness of hydroelectric license contracts over a nearly three decade time span and finds that as environmental concerns increase, so does contract flexibility, ultimately confirming the predictions of transaction cost theory. The paper offers an interesting historical look at the development of the U.S. hydroelectric dam license as it ages over time and responds to growing environmental concerns. It also, in a novel empirical application, combines traditional regression analysis with insights from textual analysis and computational linguistics.

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Bibliographic Info

Article provided by Elsevier in its journal International Review of Law and Economics.

Volume (Year): 37 (2014)
Issue (Month): C ()
Pages: 198-208

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Handle: RePEc:eee:irlaec:v:37:y:2014:i:c:p:198-208

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Web page: http://www.elsevier.com/locate/irle

Related research

Keywords: Hydro; Transaction cost theory; Electricity; Renewable energy; Word cloud; Text analysis; Environmental regulation; FERC;

References

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  15. Joskow, P.L., 1989. "The Performance Of Long Term Contracts: Further Evidence From Coal Market," Working papers 517, Massachusetts Institute of Technology (MIT), Department of Economics.
  16. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  17. Lea Kosnik, 2010. "Balancing Environmental Protection and Energy Production in the Federal Hydropower Licensing Process," Land Economics, University of Wisconsin Press, vol. 86(3).
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