The purpose of the contract is to reduce your risk. The original problem was that if you built the factory intending to sell for $25, the incumbents could reduce the price to $20 or $15, i.e. below your cost. Then you could never recover your initial investment and the high probability of that happening would deter you from entering the market to begin with.

The customer takes the risk because if you don't enter the market, they're paying $40 to the incumbents.

> If you have are an economist, please mention it - I'll take the argument more seriously on your say-so.

Professional economists have a reputation that compares disfavorably with psychics and astrologers. If an economist gives you your horoscope, make sure to get a second opinion. If the second opinion is from another economist, expect it to be different.

"The track record of economists in predicting events is monstrously bad. It is beyond simplification; it is like medieval medicine." -Nassim Nicholas Taleb