DP6322 Incomplete Contracts, the Hold-Up Problem and Asymmetric Information
|Author(s):||Patrick W. Schmitz|
|Publication Date:||June 2007|
|Keyword(s):||hold-up problem, incomplete contracts, investment incentives|
|Programme Areas:||Industrial Organization|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=6322|
Given symmetric information, in a standard hold-up problem a buyer's investment incentives are always increasing in his bargaining power. While this result is robust under one-sided private information, it can be overturned under two-sided private information.