Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory Approach
In long-term gas contracts, there is usually a risk for the seller that the buyer will refuse to take delivery. For this reason, the condition of obligation to take or pay in such contracts has become common. Commitment condition is a condition that obliges the buyer in the gas sales contract to pay...
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| Format: | Article |
| Language: | fas |
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Allameh Tabataba'i University Press
2022-03-01
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| Series: | فصلنامه پژوهشهای اقتصادی ایران |
| Subjects: | |
| Online Access: | https://ijer.atu.ac.ir/article_13474_45fd2a14348fe16cdf79372101bb83dc.pdf |
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| author | Davood Daneshjafari Mohammadmahdi Hajian Javad Jafarzadeh |
| author_facet | Davood Daneshjafari Mohammadmahdi Hajian Javad Jafarzadeh |
| author_sort | Davood Daneshjafari |
| collection | DOAJ |
| description | In long-term gas contracts, there is usually a risk for the seller that the buyer will refuse to take delivery. For this reason, the condition of obligation to take or pay in such contracts has become common. Commitment condition is a condition that obliges the buyer in the gas sales contract to pay the seller a part of the contract price, which is determined as a percentage of the total amount, even if he does not receive the agreed gas volume. The research question is whether this condition has economic efficiency? Will a long-term balance between buyer and seller be an option for this condition in the contract or not? To answer these question, first, with the concept of evolutionary game theory, we have shown a picture of contracts before the existence of this condition and after its formation. Then, by setting the normal form of the game and using Python software, we have repeated this game thousand times, the results show that accepting the condition of commitment to take or pay will be stable evolutionary equilibrium. From this perspective, the inclusion of such a condition in the contract creates economic efficiency, and the policy recommendation in this regard would be for policy makers to prefer a lower definite income to a higher probable income by including such a condition. |
| first_indexed | 2024-03-08T17:44:42Z |
| format | Article |
| id | doaj.art-37de1b7772114f32b34cae5c245f7989 |
| institution | Directory Open Access Journal |
| issn | 1726-0728 2476-6445 |
| language | fas |
| last_indexed | 2024-03-08T17:44:42Z |
| publishDate | 2022-03-01 |
| publisher | Allameh Tabataba'i University Press |
| record_format | Article |
| series | فصلنامه پژوهشهای اقتصادی ایران |
| spelling | doaj.art-37de1b7772114f32b34cae5c245f79892024-01-02T10:30:19ZfasAllameh Tabataba'i University Pressفصلنامه پژوهشهای اقتصادی ایران1726-07282476-64452022-03-01279020923010.22054/ijer.2021.63047.102813474Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory ApproachDavood Daneshjafari0Mohammadmahdi Hajian1Javad Jafarzadeh2Associate Professor of Economics, of Allameh Tabataba’i University, Tehran, IranAssistant Professor of Law, Allameh Tabataba’i University, Tehran, IranPh.D. of Oil and Gas Economics, Allameh Tabataba’i University, Tehran, IranIn long-term gas contracts, there is usually a risk for the seller that the buyer will refuse to take delivery. For this reason, the condition of obligation to take or pay in such contracts has become common. Commitment condition is a condition that obliges the buyer in the gas sales contract to pay the seller a part of the contract price, which is determined as a percentage of the total amount, even if he does not receive the agreed gas volume. The research question is whether this condition has economic efficiency? Will a long-term balance between buyer and seller be an option for this condition in the contract or not? To answer these question, first, with the concept of evolutionary game theory, we have shown a picture of contracts before the existence of this condition and after its formation. Then, by setting the normal form of the game and using Python software, we have repeated this game thousand times, the results show that accepting the condition of commitment to take or pay will be stable evolutionary equilibrium. From this perspective, the inclusion of such a condition in the contract creates economic efficiency, and the policy recommendation in this regard would be for policy makers to prefer a lower definite income to a higher probable income by including such a condition.https://ijer.atu.ac.ir/article_13474_45fd2a14348fe16cdf79372101bb83dc.pdftake or pay contracteconomic efficiencygame theory |
| spellingShingle | Davood Daneshjafari Mohammadmahdi Hajian Javad Jafarzadeh Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory Approach فصلنامه پژوهشهای اقتصادی ایران take or pay contract economic efficiency game theory |
| title | Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory Approach |
| title_full | Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory Approach |
| title_fullStr | Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory Approach |
| title_full_unstemmed | Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory Approach |
| title_short | Evaluating the Efficiency of the "Take or Pay Condition" in International Contracts for the Sale of Gas: Game Theory Approach |
| title_sort | evaluating the efficiency of the take or pay condition in international contracts for the sale of gas game theory approach |
| topic | take or pay contract economic efficiency game theory |
| url | https://ijer.atu.ac.ir/article_13474_45fd2a14348fe16cdf79372101bb83dc.pdf |
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