The relationships between the government and operators are regulated by a contract. In theory such contracts offer a choice among a continuum of options, but due to the complexity, it is impossible to realize them. Therefore the government usually offers a contract with just two alternatives, for instance, a fixed-price or a cost-plus one. However, using such binary contracts instead of the ones obtained in theory leads to a sufficient decrease in social welfare. On the presentation of the article «Full versus binary menus: What are the welfare gains?» the professor of Paris School of Economics David Martimort told us how, actually, big the loss of the society is.
