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William J. Baumol, Colin Blaydon, Charles J. Cicchetti, René M. Stulz, Jeffrey A. Dubin, Franklin M. Fisher, Robert W. Hahn, Jerry A. Hausman, William W. Hogan, Joseph P. Kalt, Paul R. Kleindorfer, Robert J. Michaels, Bruce M. Owen, Craig Pirrong, Michael A. Salinger, Steven Shavell, Vernon L. Smith, James L. Sweeney, Robert Willig & Catherine D. Wolfram, Supreme Court Amicus Brief Regarding Morgan Stanley Capital Group Inc. v. Public Utility District No. 1 of Snohomish County, Washington (AEI-Brookings Joint Center Brief No. 07-02, Nov. 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.