PSA a risk management tool in light of modern economic theories
Abstract
This article reviews, some modern economic theories to justify the conducts through which risks, rewards and incentives are harmonised, allowing petroleum contracts to become acceptable to involving parties. The author wishes to contribute more understanding on economic implications behind petroleum contracts. Therein, PSA is analysed in light of Pareto optimal, sharecropping and principal - agent theories to highlight PSA’s superior features compared to other forms of contracts from risk management perspective. Vietnam’s petroleum contract system is also reflected in this spectrum.
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