Making a market for Miscanthus: Can new contract designs solve the biofuel investment hold-up problem?
AbstractWe present designs for optimal contracts to solve the investment hold-up problem for perennial crops for the biofuel industry. A fixed-price contract is ex-ante efficient but renegotiation-proof for a limited range of discount parameters. A perfectly- indexed contract is both renegotiation-proof and ex-post efficient. Provided long-run land prices are stationary, the expected cost for both contracts converges to the long-run expected price of land for a risk-neutral farmer.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado with number 61743.
Date of creation: 2010
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Biofuels; Miscanthus; contract theory; industrial organization; renegotiation-proof contract; Marketing;
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