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 invests ef...

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Autores:
Tipo de recurso:
Fecha de publicación:
2020
Institución:
Universidad del Rosario
Repositorio:
Repositorio EdocUR - U. Rosario
Idioma:
eng
OAI Identifier:
oai:repository.urosario.edu.co:10336/23456
Acceso en línea:
https://doi.org/10.1515/bejte-2018-0190
https://repository.urosario.edu.co/handle/10336/23456
Palabra clave:
Bilateral investment
Hold-up
Latent contracts
Rights
License
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spelling 5979136002020-05-26T00:02:11Z2020-05-26T00:02:11Z2020In 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.application/pdfhttps://doi.org/10.1515/bejte-2018-019019351704https://repository.urosario.edu.co/handle/10336/23456engDe GruyterB.E. Journal of Theoretical EconomicsB.E. Journal of Theoretical Economics, ISSN:19351704,(2020)https://www.scopus.com/inward/record.uri?eid=2-s2.0-85082180380&doi=10.1515%2fbejte-2018-0190&partnerID=40&md5=44df4f33f4213cb38deaeb16b94b797aAbierto (Texto Completo)http://purl.org/coar/access_right/c_abf2instname:Universidad del Rosarioreponame:Repositorio Institucional EdocURBilateral investmentHold-upLatent contractsCompetition with Nonexclusive Contracts: Tackling the Hold-Up ProblemarticleArtículohttp://purl.org/coar/version/c_970fb48d4fbd8a85http://purl.org/coar/resource_type/c_6501Roig Roig, Guillem10336/23456oai:repository.urosario.edu.co:10336/234562022-05-02 07:37:17.236957https://repository.urosario.edu.coRepositorio institucional EdocURedocur@urosario.edu.co
dc.title.spa.fl_str_mv Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
title Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
spellingShingle Competition with Nonexclusive Contracts: Tackling the Hold-Up Problem
Bilateral investment
Hold-up
Latent contracts
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
dc.subject.keyword.spa.fl_str_mv Bilateral investment
Hold-up
Latent contracts
topic Bilateral investment
Hold-up
Latent contracts
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.
publishDate 2020
dc.date.accessioned.none.fl_str_mv 2020-05-26T00:02:11Z
dc.date.available.none.fl_str_mv 2020-05-26T00:02:11Z
dc.date.created.spa.fl_str_mv 2020
dc.type.eng.fl_str_mv article
dc.type.coarversion.fl_str_mv http://purl.org/coar/version/c_970fb48d4fbd8a85
dc.type.coar.fl_str_mv http://purl.org/coar/resource_type/c_6501
dc.type.spa.spa.fl_str_mv Artículo
dc.identifier.doi.none.fl_str_mv https://doi.org/10.1515/bejte-2018-0190
dc.identifier.issn.none.fl_str_mv 19351704
dc.identifier.uri.none.fl_str_mv https://repository.urosario.edu.co/handle/10336/23456
url https://doi.org/10.1515/bejte-2018-0190
https://repository.urosario.edu.co/handle/10336/23456
identifier_str_mv 19351704
dc.language.iso.spa.fl_str_mv eng
language eng
dc.relation.citationTitle.none.fl_str_mv B.E. Journal of Theoretical Economics
dc.relation.ispartof.spa.fl_str_mv B.E. Journal of Theoretical Economics, ISSN:19351704,(2020)
dc.relation.uri.spa.fl_str_mv https://www.scopus.com/inward/record.uri?eid=2-s2.0-85082180380&doi=10.1515%2fbejte-2018-0190&partnerID=40&md5=44df4f33f4213cb38deaeb16b94b797a
dc.rights.coar.fl_str_mv http://purl.org/coar/access_right/c_abf2
dc.rights.acceso.spa.fl_str_mv Abierto (Texto Completo)
rights_invalid_str_mv Abierto (Texto Completo)
http://purl.org/coar/access_right/c_abf2
dc.format.mimetype.none.fl_str_mv application/pdf
dc.publisher.spa.fl_str_mv De Gruyter
institution Universidad del Rosario
dc.source.instname.spa.fl_str_mv instname:Universidad del Rosario
dc.source.reponame.spa.fl_str_mv reponame:Repositorio Institucional EdocUR
repository.name.fl_str_mv Repositorio institucional EdocUR
repository.mail.fl_str_mv edocur@urosario.edu.co
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