DP9065 Public goods and the hold-up problem under asymmetric information
|Author(s):||Patrick W. Schmitz|
|Publication Date:||July 2012|
|Keyword(s):||asymmetric information, incomplete contracts, investment incentives, public goods|
|JEL(s):||D82, D86, H41|
|Programme Areas:||Industrial Organization|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9065|
An agent can make an observable but non-contractible investment. A principal then offers to collaborate with the agent to provide a public good. Private information of the agent about his valuation may either decrease or increase his investment incentives, depending on whether he learns his type before or after the investment stage.