Working Paper: CEPR ID: DP6322
Authors: Patrick W. Schmitz
Abstract: 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.
Keywords: holdup problem; incomplete contracts; investment incentives
JEL Codes: D82; D86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Buyer's bargaining power (L14) | Buyer's investment incentives (G31) |
| Asymmetric information (D82) | Ex post efficiency (D61) |
| Seller's bargaining power (L14) | Buyer's investment incentives (G31) |