Discussion paper

DP6322 Incomplete Contracts, the Hold-Up Problem and Asymmetric Information

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.

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Citation

Schmitz, P (2007), ‘DP6322 Incomplete Contracts, the Hold-Up Problem and Asymmetric Information‘, CEPR Discussion Paper No. 6322. CEPR Press, Paris & London. https://cepr.org/publications/dp6322