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| Daniel Danau |
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| ''A note on fixed and flexible-term contracts'' |
| ( 2009, Vol. 29 No.2 ) |
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| Engel et al. (1997 2001 2007) have proposed flexible-term contracts as a solution to suboptimal renegotiation of public-private partnerships. We show that whenever the uncertainty lasts over more than two periods, flexible-term contracts have a drawback. The expected duration of a flexible-term contract can be higher than the (certain) duration of a fixed-term contract, the difference being directly proportional to the volatility of the project. |
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| Keywords: public-private partnerships |
JEL: D8 - Information, Knowledge, and Uncertainty: General
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| Manuscript Received : Dec 02 2008 | | Manuscript Accepted : May 15 2009 |
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