Suppose that a power plant and a railroad have been doing business with each other for some time, with the railroad hauling coal to the power plant. Because of an expansion at the power plant, the two parties decide that both would be better off if certain improvements were made to the track connecting coalproducing areas of the region to this power plant. These improvements would cost $50 million, and would be made by the railroad. They would only benefit dealings between the railroad and this specific power plant. The parties have tentatively agreed on what the power plant will pay the railroad for transportation fees.

1. Define ex post opportunism, and note the factors that lead to it.

2. Is ex post opportunism a concern in this situation? Why, or why not?

3.Are there any antitrust issues involved here