Negative Option Contracts and Consumer Switching Costs
A negative option contract is an agreement by which a buyer accepts a flow of goods from a vendor until the buyer notifies the vendor otherwise. In the finance literature , a negative option contract would probably be referred to as a negative call option. The contract gives the holder the right to refuse buying the good or service, but the holder does not have the exercise this right. The trade literature argues that negative option contracts were pioneered by the Book-of-the-Month Club more than 60 years ago . Book Club members agree to accept, with the right of refusal, a selected book ...
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