Abstract

Investment disputes involving long-term contracts often require a tribunal to separate losses arising from risks inherent in the investment from losses associated with a later alteration of the economic environment in which the investment was made. Legal doctrine answers whether a State is liable and whether a loss is compensable; economic analysis can assist with a narrower but important antecedent question: did the adverse outcome remain within the range of economic conditions that could reasonably have been priced ex ante, or did one or more relevant variables move into a ...