Determinants of contract completeness: An environmental regulatory application

•An investigation into the completeness of hydroelectric license contracts from 1977 to 2007.•A robust confirmation of the main predictions of transaction cost theory is provided.•In the tradeoff between contractual flexibility vs. rigidity, in this context flexibility has won out over the time span...

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Bibliographic Details
Published inInternational review of law and economics Vol. 37; pp. 198 - 208
Main Author Kosnik, Lea-Rachel
Format Journal Article
LanguageEnglish
Published New York Elsevier Inc 01.03.2014
Elsevier Science Ltd
Subjects
Contract management
Contracts
Economic theory
Electricity
Environmental regulation
Environmental regulations
FERC
Hydro
Pollution control
Regression analysis
Regulation
Renewable energy
Studies
Text analysis
Trade-off
Tradeoff analysis
Transaction cost theory
Transaction costs
U.S.A
Word cloud
United States > US
FERC
Text analysis
Electricity
Renewable energy
Word cloud
Environmental regulation
Hydro
Transaction cost theory
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Summary:•An investigation into the completeness of hydroelectric license contracts from 1977 to 2007.•A robust confirmation of the main predictions of transaction cost theory is provided.•In the tradeoff between contractual flexibility vs. rigidity, in this context flexibility has won out over the time span covered, as environmental concerns embodying hydropower production have dominated.•Textual analysis informs the form this increase in contractual flexibility has taken. 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.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0144-8188
1873-6394
DOI:10.1016/j.irle.2013.11.001