Seminario titulado: " Thriving on uncertainty: Strategic interaction and long-term supplier contracts in oligopolistic settings". El seminario será el MARTES 10 de septiembre a las 12:30hs, en la sala Dr. Ernest LLuch (Dpto de Economía)
Abstract: In some markets, firms may face considerable uncertainty on the cost of the inputs and may want to sign contracts at a fixed price with suppliers. We examine in this paper the strategic aspects of long-term contracts with suppliers. Long-term agreements at a fixed price may have an insurance motive, and to isolate the strategic effects, we assume that firms are risk-neutral. While a monopolist would never sign a long-term contract, we show that, in an oligopoly, long-term contracts may provide a strategic advantage. Our model provides relevant implications for understanding the implementation of Power Purchase Agreements (PPAs) among firms that belong to electro-intensive industries.
