Contracting for Optimal Delivery Time in Long-Term Projects
AbstractThis paper deals with the effects of commonly used payment schedules on the execution of investment projects which are produced to order over prolonged periods of time. It is shown that even if the parties settle on execution terms which maximize their joint benefits (assumed to reflect authentic social values), the contractor will generally be able�to secure additional gain, while creating social waste, by shifting the delivery date over time. Moreover, when payments are tied to work progress, he may also have an incentive to deploy inputs inefficiently over time for any given termination date. Some methods which eliminate those diseconomies, while preserving efficient features of existing payment schedules, are developed under increasingly complex assumptions concerning the project's nature. These methods are also adapted for an inflationary environment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 7 (1976)
Issue (Month): 1 (Spring)
Contact details of provider:
Web page: http://www.rje.org
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.