Quantity and Price Adjustment in Long-Term Contracts: A Case Study of Petroleum Coke
In 1964, the Federal Trade Commission (FTC) launched an investigation into the possible anticompetitive effect of the long-term contracts under which 8 oil refineries sold petroleum coke to the Great Lakes Carbon Corp. (GLC). This investigation culminated in a decision in 1973 that these contracts v...
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| Veröffentlicht in: | The Journal of law & economics 1987-10, Vol.30 (2), p.369-398 |
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| container_end_page | 398 |
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| container_title | The Journal of law & economics |
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| creator | Goldberg, Victor P. Erickson, John R. |
| description | In 1964, the Federal Trade Commission (FTC) launched an investigation into the possible anticompetitive effect of the long-term contracts under which 8 oil refineries sold petroleum coke to the Great Lakes Carbon Corp. (GLC). This investigation culminated in a decision in 1973 that these contracts violated the antitrust statutes. Here, quantity and price adjustment in long-term contracts are studied using data collected by the FTC in its investigation. One of the most surprising findings is the frequent use of multipart, or nonlinear prices to protect the seller's reliance. Virtually all the GLC contracts that indexed to crude oil prices imposed maximum-minimum limits; however, while the maximum (minimum) was about 40%-50% above (below) the base price in the low-inflation 1960s, it was only about 15% above (below) the base in the high-inflation 1970s. Increased price volatility resulted in contracts that were of shorter duration and were easier to terminate. |
| doi_str_mv | 10.1086/467141 |
| format | Article |
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| ispartof | The Journal of law & economics, 1987-10, Vol.30 (2), p.369-398 |
| issn | 0022-2186 1537-5285 |
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| source | Worldwide Political Science Abstracts; HeinOnline Law Journal Library; Periodicals Index Online; Jstor Complete Legacy |
| subjects | Aluminum Antitrust Case studies Clauses Coke Contract law Contract negotiations Contracts Crude oil Crude oil prices Indexing Inventories Law Long term Market prices Methods Opportunistic behavior Petroleum Petroleum coke Petroleum industry Price level changes Prices Pricing policies Regulation |
| title | Quantity and Price Adjustment in Long-Term Contracts: A Case Study of Petroleum Coke |
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