Supreme Court Amicus Brief Regarding Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington

49 Pages Posted: 2 Dec 2007

See all articles by William J. Baumol

William J. Baumol

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies; Leonard N. Stern School of Business - Department of Economics

Colin Blaydon

Tuck School of Business, Dartmouth College

Charles J. Cicchetti

affiliation not provided to SSRN

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Jeffrey A. Dubin

California Institute of Technology - Division of the Humanities and Social Sciences

Franklin M. Fisher

Massachusetts Institute of Technology (MIT) - Department of Economics

Robert W. Hahn

University of Oxford, Smith School; Georgetown University

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

William W. Hogan

Harvard University - Harvard Kennedy School (HKS)

Joseph P. Kalt

Harvard University - Harvard Kennedy School (HKS)

Paul R. Kleindorfer

University of Pennsylvania - Operations & Information Management Department; Paul Dubrule Professor of Sustainable Development & Distinguished Research Professor at INSEAD

Robert J. Michaels

California State University, Fullerton - Department of Economics

Bruce M. Owen

Stanford University

Craig Pirrong

University of Houston - Department of Finance

Michael A. Salinger

Boston University - Questrom School of Business

Steven Shavell

Harvard Law School; National Bureau of Economic Research (NBER)

Vernon L. Smith

Chapman University - Economic Science Institute; Chapman University School of Law

James L. Sweeney

affiliation not provided to SSRN

Robert Willig

Princeton University - Woodrow Wilson School of Public and International Affairs

Catherine D. Wolfram

University of California, Berkeley - Economic Analysis & Policy Group; National Bureau of Economic Research (NBER)

Date Written: November 1, 2007

Abstract

Economists have long recognized that certainty of contract is essential to a healthy economy. Long-term forward contracts, in particular, help reduce financial risk. Those contracts can only accomplish that goal, however, if parties know the contracts will be enforced.

From an economic and policy standpoint, long-term energy contracts should be abrogated only in truly exceptional circumstances. The mere fact that a price seems too high in retrospect does not justify abrogating contracts voluntarily agreed to by sophisticated buyers and sellers. Nor do generalized claims of - market dysfunction - at the time the contract was formed.

Suggested Citation

Baumol, William J. and Blaydon, Colin and Cicchetti, Charles J. and Stulz, Rene M. and Dubin, Jeffrey A. and Fisher, Franklin M. and Hahn, Robert W. and Hausman, Jerry A. and Hogan, William W. and Kalt, Joseph P. and Kleindorfer, Paul R. and Michaels, Robert J. and Owen, Bruce M. and Pirrong, Craig and Salinger, Michael A. and Shavell, Steven and Smith, Vernon L. and Sweeney, James L. and Willig, Robert D. and Wolfram, Catherine D., Supreme Court Amicus Brief Regarding Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington (November 1, 2007). AEI-Brookings Joint Center Brief No. 07-02. Available at SSRN: https://ssrn.com/abstract=1034200 or http://dx.doi.org/10.2139/ssrn.1034200

William J. Baumol

New York University - Stern School of Business, Berkley Center for Entrepreneurial Studies ( email )

New York, NY
United States
212-998-8943 (Phone)
212-995-3932 (Fax)

Leonard N. Stern School of Business - Department of Economics

269 Mercer Street
New York, NY 10003
United States

Colin Blaydon

Tuck School of Business, Dartmouth College ( email )

Hanover, NH 03755
United States

Charles J. Cicchetti

affiliation not provided to SSRN ( email )

No Address Available

Rene M. Stulz

Ohio State University (OSU) - Department of Finance ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Jeffrey A. Dubin

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States
(626) 395-4059 (Phone)

Franklin M. Fisher

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-391
Cambridge, MA 02142
United States
617-864-3752 (Phone)

HOME PAGE: http://web.mit.edu/ffisher/www

Robert W. Hahn (Contact Author)

University of Oxford, Smith School ( email )

Oxford
United Kingdom

Georgetown University

Georgetown Center for Business and Public Policy
Washington, DC 20057
United States

Jerry A. Hausman

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
Room E52-271a
Cambridge, MA 02142
United States
617-253-3644 (Phone)
617-253-1330 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

William W. Hogan

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-1317 (Phone)
617-495-1635 (Fax)

Joseph P. Kalt

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Paul R. Kleindorfer

University of Pennsylvania - Operations & Information Management Department ( email )

Philadelphia, PA 19104
United States

Paul Dubrule Professor of Sustainable Development & Distinguished Research Professor at INSEAD

Boulevard de Constance
77305 Fontainebleau Cedex
France

Robert J. Michaels

California State University, Fullerton - Department of Economics ( email )

Fullerton, CA 92834
United States
714-278-2588 (Phone)
714-278-3097 (Fax)

Bruce M. Owen

Stanford University ( email )

366 Galvez Street
Stanford, CA 94305-6015
United States

HOME PAGE: http://siepr.stanford.edu/

Craig Pirrong

University of Houston - Department of Finance ( email )

Houston, TX 77204
United States

Michael A. Salinger

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
United States
617-353-4408 (Phone)

Steven Shavell

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-495-3668 (Phone)
617-496-2256 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Vernon L. Smith

Chapman University - Economic Science Institute ( email )

One University Dr.
Orange, CA 92866
United States
714-628-2830 (Phone)

Chapman University School of Law ( email )

One University Drive
Orange, CA 92866-1099
United States

James L. Sweeney

affiliation not provided to SSRN ( email )

No Address Available

Robert D. Willig

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

401 Robertson Hall
Princeton, NJ 08544-1021
United States
609-258-4843 (Phone)
609-258-5014 (Fax)

Catherine D. Wolfram

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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