Making a market for Miscanthus: Can new contract designs solve the biofuel investment hold-up problem?

We 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.


Subject(s):
Issue Date:
2010
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/61743
Total Pages:
2
Series Statement:
Selected Poster
11638




 Record created 2017-04-01, last modified 2017-04-26

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