Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem

"In an environment in which a buyer and a seller make ex-ante investments, competition among sellers can solve the hold-up problem without the design of ex-ante contracts but, in the case of low levels of competition, this may lead to inefficient investments. This paper shows that a seller inve...

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Detalles Bibliográficos
Autor Principal: Roig G.
Formato: Artículo (Article)
Lenguaje:Inglés (English)
Publicado: De Gruyter 2020
Materias:
Acceso en línea:https://repository.urosario.edu.co/handle/10336/23456
https://doi.org/10.1515/bejte-2018-0190
id ir-10336-23456
recordtype dspace
spelling ir-10336-234562020-06-03T22:15:11Z Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem Roig G. Bilateral investment Hold-up Latent contracts "In an environment in which a buyer and a seller make ex-ante investments, competition among sellers can solve the hold-up problem without the design of ex-ante contracts but, in the case of low levels of competition, this may lead to inefficient investments. This paper shows that a seller invests efficiently when each seller offers latent contracts designed to exclude any other seller from trade (i. e. most intense competition). Because competition among sellers allows the buyer to appropriate part of the gains from his investment, the hold-up problem vanishes for most of the buyer's investment costs. However, the seller appropriates more than his marginal contribution to the gains from trade, and over-invests, when a group of sellers does not offer latent contracts (under less intense competition). Therefore, efficient investments can only be implemented when competition is at its most intense. © 2020 Walter de Gruyter GmbH, Berlin/Boston 2020." 2020 2020-05-26T00:02:11Z info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion 19351704 https://repository.urosario.edu.co/handle/10336/23456 https://doi.org/10.1515/bejte-2018-0190 eng info:eu-repo/semantics/openAccess application/pdf De Gruyter instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR
institution EdocUR - Universidad del Rosario
collection DSpace
language Inglés (English)
topic Bilateral investment
Hold-up
Latent contracts
spellingShingle Bilateral investment
Hold-up
Latent contracts
Roig G.
Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
description "In an environment in which a buyer and a seller make ex-ante investments, competition among sellers can solve the hold-up problem without the design of ex-ante contracts but, in the case of low levels of competition, this may lead to inefficient investments. This paper shows that a seller invests efficiently when each seller offers latent contracts designed to exclude any other seller from trade (i. e. most intense competition). Because competition among sellers allows the buyer to appropriate part of the gains from his investment, the hold-up problem vanishes for most of the buyer's investment costs. However, the seller appropriates more than his marginal contribution to the gains from trade, and over-invests, when a group of sellers does not offer latent contracts (under less intense competition). Therefore, efficient investments can only be implemented when competition is at its most intense. © 2020 Walter de Gruyter GmbH, Berlin/Boston 2020."
format Artículo (Article)
author Roig G.
author_facet Roig G.
author_sort Roig G.
title Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
title_short Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
title_full Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
title_fullStr Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
title_full_unstemmed Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
title_sort competition with nonexclusive contracts: tackling the hold-up problem
publisher De Gruyter
publishDate 2020
url https://repository.urosario.edu.co/handle/10336/23456
https://doi.org/10.1515/bejte-2018-0190
_version_ 1669098379748048896
score 11,828437