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A consolidated model of real options, game theory and transactions costs analysis for the design of contractual arrangements

Author

Listed:
  • Milanesi, Gastón

    (Universidad Nacional del Sur. Argentina, Departamento de Ciencias de la Administración)

  • Tohmé, Fernando

    (Universidad Nacional del Sur. Argentina. Departamento de Economía)

Abstract

In this paper we propose a framework that combines Real Option (RO), Game Theory (GT) and Transaction Cost Analysis (TCA), to build an analytical model for the agreements designs that covers contingent events. It illustrates the use of the model over a supply agreement with three scenarios: the two firsts supposes technological stability- variability combined with contractual rigidity; the third supposes technological and contractual flexibility. The results obtained showing the equilibrium between strategic flexibility benefits (RO), incentives designs that determined the agents´ behaviors (GT) and transaction cost reduction (TCA).

Suggested Citation

  • Milanesi, Gastón & Tohmé, Fernando, 2015. "A consolidated model of real options, game theory and transactions costs analysis for the design of contractual arrangements," Revista de Economía Política de Buenos Aires, Universidad de Buenos Aires. Facultad de Ciencias Económicas., issue 14, pages 59-81, December.
    • Handle: RePEc:ake:repba1:y:2015:i:14:p:59-81
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    More about this item

    Keywords

    Contracts; Transaction Costs; Real Options; Game Theory;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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