Markets Can Solve the Hold-Up Problem
AbstractSome regulatory programs are effective only if firms make some irreversible investments which reduce the cost of compliance. A firm potentially subject to regulation may therefore behave strategically - not investing and thus forcing the regulator to void the proposed regulation. We show that such incentives, which resemble a hold-up problem, may not be overcome when government's only tool is the imposition of an emissions tax.
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Bibliographic InfoPaper provided by California Irvine - School of Social Sciences in its series Papers with number 95-96-9.
Length: 13 pages
Date of creation: 1996
Date of revision:
Contact details of provider:
Postal: UNIVERSITY OF CALIFORNIA IRVINE, SCHOOL OF SOCIAL SCIENCES, IRVINECALIFORNIA 91717 U.S.A.
INVESTMENTS; TAXATION; CORPORATIONS; GOVERNMENT POLICY;
Find related papers by JEL classification:
- D20 - Microeconomics - - Production and Organizations - - - General
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- D29 - Microeconomics - - Production and Organizations - - - Other
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