A solution to the hold-up problem involving gradual investment

• 成果类型: Article
• 署名作者: Pitchford, R; Snyder, CA
• 署名单位: George Washington University; Australian National University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/S0022-0531(03)00120-0
• 发表日期: 2004
• 页码: 88-103
• 关键词: hold-up problem; gradualism; incomplete contracts; INVESTMENT; contribution games

摘要

We consider a setting in which the buyer's ability to hold up a seller's investment is so severe that there is no investment in equilibrium of the static game typically analyzed. We show that there exists an equilibrium of a related dynamic game generating positive investment. The seller makes a sequence of gradually smaller investments, each repaid by the buyer under the threat of losing further seller investment. As modeled frictions converge to zero, the equilibrium outcome converges to the first best. We draw connections between our work and the growing literature on gradualism in public good contribution games and bargaining games. (C) 2003 Elsevier Science (USA). All rights reserved.