Blockchain Digital Test Certificates for COVID-19

COVID-19 is a pandemic outbreak for each country worldwide. Each government needs to monitor every citizen and the COVID-19 test becomes an essential evidence for people who are travelling. This gives rise to the necessity of disruptive technologies such as Blockchain. In this paper, we provide an overview of the Hyperledger and Ethereum platforms and present how healthcare organizations can control and monitor digital health test certificates with citizens or other stakeholders. We also present a smart contract structure and implementation for COVID-19 test certificates in both blockchain platforms.

Selection, Leverage, and Default in the Mortgage Market

We ask whether the correlation between mortgage leverage and default is due to moral hazard (the causal effect of leverage) or adverse selection (ex ante risky borrowers choosing larger loans). We separate these information asymmetries using a natural experiment resulting from the contract structure of option adjustable-rate mortgages and unexpected 2008 divergence of indexes that determine rate adjustments. Our point estimates suggest that moral hazard is responsible for 40% of the correlation in our sample, while adverse selection explains 60%. We calibrate a simple model to show that leverage regulation must weigh default prevention against distortions due to adverse selection.

Comment on “Optimal Contract to Induce Continued Effort”

In this comment, we first use a counterexample to demonstrate that the optimal contract structure proposed in section 4 of Sun and Tian (2018) can be wrong when the two players’ discount rates are different. We then specify correct optimal contract structures, which involve generalizing the contract space to allow random termination. Numerical study with a wide range of model parameters illustrates that such a random termination only occurs sparingly in optimal contracts. Moreover, the suboptimality gap, measured by the relative improvement of the optimal contract over the best contract without random termination, is extremely small. This paper was accepted by Manel Baucells, decision analysis.

Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

Structuring Contract-for-Difference Instruments for Hedging Electricity Price Risks on a Blockchain-based Marketplace

The volatile nature of day-ahead electricity markets means that participants often resort to some form of derivative hedging instrument. One such derivative instrument is a Contract-for-Difference (CfD), specifically available to renewable generators in some jurisdictions to enable them to hedge against their price risk. CfD is a bilateral arrangement between a generator selling into, and an offtaker buying out of, a centrally cleared pool market for electricity. In this arrangement, the generator subsidizes the offtaker when the spot price is high; whereas, the offtaker subsidizes the generator when the spot price is low. This establishes a synthetic bilateral electricity transaction, operating in parallel to the pool market. Embracing CfD to hedge against price risk presents new risks such as counterparty credit, margining, third-party, and legal risks. They also incur high costs and possess underlying process risks. Decentralized Finance - an overarching term representing financial services built on top of a public blockchain - seems to present particularly compelling opportunities in electricity derivatives for these reasons. Therefore, we propose a novel Decentralized Finance instrument: a blockchain-based marketplace governed by a smart contract to act as a mediator between stakeholders mutually enrolled in bilateral CfD arrangements. The employed smart contract structure autonomously and irrefutably enforces the terms of the CfD, underpinned by a novel collateralization and settlement mechanism. This novel approach mitigates the hedging-related and underlying process risks of traditional CfD instruments.

Supply Chains and Antitrust Governance

Antitrust regulations are meant to promote fair competition in the market, but balancing administrative and legal costs with enforcement can be difficult when multilayered supply chains are involved. The canonical example of this challenge is the landmark Illinois Brick ruling, which limits antitrust damages to only the direct purchasers of a product; for instance, consumers can file antitrust claims against colluding retailers but not against colluding manufacturers—only retailers can file claims against manufacturers. This controversial ruling was meant to reduce legal costs, but it can clearly lead to missed enforcement opportunities. In this paper, we demonstrate how the Illinois Brick ruling interacts with contracts adopted in the supply chain, and we show that otherwise equivalent supply chain arrangements can have markedly different effects. In particular, we find that wholesale price, minimum order quantity, revenue sharing, and quantity discount contracts lead retailers to take legal action against manufacturers in the event of collusive behavior. However, the wholesale price plus fixed fee contract structure (also known as a two-part tariff or slotting fee contract) facilitates collusion among the manufacturers with retailers compensated by the fixed fee and not filing the antitrust litigation. We further demonstrate that collusion is more likely under high demand uncertainty and high competition at the retail level but is less likely under high competition at the manufacturer level. Our paper helps public enforcers identify market conditions conducive to antitrust violations. This paper was accepted by Vishal Gaur, operations management.

The Content of a Paid Medical Services Contract: Theoretical and Applied Analysis

Introduction: the paper deals with the features and conditions of a contract structure that is widely in demand at the present time – a paid medical services contract. The paper analyzes the provisions of the key legal acts regulating the sphere of paid medical services, including their contractual formalization, the legislation on consumer protection, which applies to the legal relations of the parties arising from paid medical services contracts, and the content of this contract. Special attention is paid to the consideration of the legislative and doctrinal approaches to the issue of essential and mandatory conditions of the contract under consideration, as well as to the relevant judicial and contractual practice. Methods: in the presented research, the traditional general scientific research methods were used, such as the dialectical method of cognition, analysis, synthesis, induction, deduction, etc., as well as the specific scientific legal methods, including formal legal, the method of legal interpretation, etc. Results: the authors substantiate the point of view that the essential conditions of the paid medical services contract are only the conditions on its subject. The authors believe that the conditions stipulated in par. 17 of the Decree of the Government of the Russian Federation No. 1006 of 04.10.2012 “On approval of the Rules for providing paid medical services by medical organizations” should be considered as mandatory conditions. Taking into account the existing approaches in the law enforcement practice, the conditions that are reflected in the paid medical services contract would help prevent disputes, as well as protect the rights and legitimate interests of the parties to the contract. Based on the analysis of the judicial practice, a list of conditions of the paid medical services contract that infringe on the rights of consumers has been formed, which should not be included in it. Conclusions: based on the results of the study, the two groups of factors were identified, which influence the formation of the methodological recommendations for drawing up a paid medical services contract; the recommendations for improving contractual work in the medical organizations are formulated.