Global Gas International offers to subcontract the Halidurton Heavy Construction Corporation to build an oil pipeline from
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Question:
Global Gas International offers to subcontract the Halidurton Heavy Construction Corporation to build an oil pipeline from Canada to New Orleans for $500 million. The probability that the oil pipeline will leak, causing environmental damage, is . If so, the legal liabilities will be $600 million.
- IfHalidurtonis risk-averse and fair insurance is offered, how much insurance would it buy?
- If Global Gas International will partially indemnifyHalidurtonso that the largest damages thatHalidurtonwould have to pay is $200 million, what is the that leaves it indifferent about accepting the contract?
- If partially indemnified, how much fair insurance willHalidurtonbuy?
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