Price control in long term contracts : the case of coal
A sample of coal contracts between electric utilities and coal suppliers is used to analyze mechanisms for determining prices in long term coal contracts. Alternative methods for determining prices in long term contracts are discussed and the actual adjustment mechanisms specified in a set of...
| Main Author: | |
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| Format: | Working Paper |
| Language: | en_US |
| Published: |
MIT Energy Lab
2005
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| Online Access: | http://hdl.handle.net/1721.1/18208 |
| _version_ | 1826208463222472704 |
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| author | Joskow, Paul L. |
| author_facet | Joskow, Paul L. |
| author_sort | Joskow, Paul L. |
| collection | MIT |
| description | A sample of coal contracts between electric utilities and coal suppliers is
used to analyze mechanisms for determining prices in long term coal contracts.
Alternative methods for determining prices in long term contracts are
discussed and the actual adjustment mechanisms specified in a set of actual
coal contracts presented. The vast majority of long term coal contracts use a
base price plus escalation or cost-plus adjustment formula. Base price
equations and subsequent transactions price equations are estimated. The
analysis shows that on average long term contracts are flexible in the sense
that prices adjust to major changes in the costs of supplying coal. However,
some pricing rigidities are found which appear to reflect the economic
conditions prevailing at the time the contracts were executed. Furthermore,
some contracts track changes in market values very poorly. |
| first_indexed | 2024-09-23T14:06:04Z |
| format | Working Paper |
| id | mit-1721.1/18208 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T14:06:04Z |
| publishDate | 2005 |
| publisher | MIT Energy Lab |
| record_format | dspace |
| spelling | mit-1721.1/182082019-04-12T08:38:42Z Price control in long term contracts : the case of coal Joskow, Paul L. A sample of coal contracts between electric utilities and coal suppliers is used to analyze mechanisms for determining prices in long term coal contracts. Alternative methods for determining prices in long term contracts are discussed and the actual adjustment mechanisms specified in a set of actual coal contracts presented. The vast majority of long term coal contracts use a base price plus escalation or cost-plus adjustment formula. Base price equations and subsequent transactions price equations are estimated. The analysis shows that on average long term contracts are flexible in the sense that prices adjust to major changes in the costs of supplying coal. However, some pricing rigidities are found which appear to reflect the economic conditions prevailing at the time the contracts were executed. Furthermore, some contracts track changes in market values very poorly. 2005-07-25T16:42:19Z 2005-07-25T16:42:19Z 1987 Working Paper 19524240 http://hdl.handle.net/1721.1/18208 en_US MIT-EL 87-011WP 2955439 bytes application/pdf application/pdf MIT Energy Lab |
| spellingShingle | Joskow, Paul L. Price control in long term contracts : the case of coal |
| title | Price control in long term contracts : the case of coal |
| title_full | Price control in long term contracts : the case of coal |
| title_fullStr | Price control in long term contracts : the case of coal |
| title_full_unstemmed | Price control in long term contracts : the case of coal |
| title_short | Price control in long term contracts : the case of coal |
| title_sort | price control in long term contracts the case of coal |
| url | http://hdl.handle.net/1721.1/18208 |
| work_keys_str_mv | AT joskowpaull pricecontrolinlongtermcontractsthecaseofcoal |