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Does Competition Solve the Hold-Up Problem?

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Author Info
Felli, L.
Roberts, K.

Additional information is available for the following registered author(s):

Abstract

In an environment in which both buyers and sellers can undertake match specific investments, the presence of market competition for matches may solve hold-up and coordination problems generated by the absence of complete contingent contracts. In particular, this paper shows that when marching is assortative and sellers' investment precede market competition the investments are constrained efficient.

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Publisher Info
Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2000-w11.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 54 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:nuf:econwp:2000-w11

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Web page: http://www.nuff.ox.ac.uk/economics/

For technical questions regarding this item, or to correct its listing, contact: (Catherine McNeill).

Related research
Keywords: COMPETITION MARKET STRUCTURE

Other versions of this item:

Find related papers by JEL classification:
D40 - Microeconomics - - Market Structure and Pricing - - - General
D41 - Microeconomics - - Market Structure and Pricing - - - Perfect Competition

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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  3. Georg Nöldeke & Klaus M. Schmidt, 1992. "Option Contracts and Renegotiation - A Solution to the Hold-Up Problem," Discussion Paper Serie A 417, University of Bonn, Germany, revised Aug 1993.
    Other versions:
  4. Harold L. Cole & George J. Mailath & Andrew Postlewaite, . "Efficient Non-Contractible Investments," Penn CARESS Working Papers 08d6793d32cab8f6e1f46dac0, UCLA Department of Economics. [Downloadable!]
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  5. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
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  6. Ben Lockwood & David de Meza, 1998. "The Property-Rights Theory of the Firm with Endogenous Timing of Asset Purchase," STICERD - Theoretical Economics Paper Series 364, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
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  15. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.
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  16. Aghion, Philippe & Dewatripont, Mathias & Rey, Patrick, 1994. "Renegotiation Design with Unverifiable Information," Econometrica, Econometric Society, vol. 62(2), pages 257-82, March. [Downloadable!] (restricted)
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  17. Cooper, Russell & John, Andrew, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 441-63, August. [Downloadable!] (restricted)
  18. Burdett, Ken & Coles, Melvyn G, 1997. "Marriage and Class," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 141-68, February.
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  21. Hart, Oliver D, 1979. "Monopolistic Competition in a Large Economy with Differentiated Commodities," Review of Economic Studies, Blackwell Publishing, vol. 46(1), pages 1-30, January. [Downloadable!] (restricted)
  22. MacLeod, W Bentley & Malcomson, James M, 1993. "Investments, Holdup, and the Form of Market Contracts," American Economic Review, American Economic Association, vol. 83(4), pages 811-37, September. [Downloadable!] (restricted)
  23. Acemoglu, Daron, 1997. "Training and Innovation in an Imperfect Labour Market," Review of Economic Studies, Blackwell Publishing, vol. 64(3), pages 445-64, July. [Downloadable!] (restricted)
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  26. Kaneko, Mamoru, 1982. "The central assignment game and the assignment markets," Journal of Mathematical Economics, Elsevier, vol. 10(2-3), pages 205-232, September. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Nobuhiro Kiyotaki & Ricardo Lagos, 2006. "A model of job and worker flows," Staff Report 358, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  2. de Meza, David & Lockwood, Ben, 2004. "Too Much Investment : A Problem Of Coordination Failure," The Warwick Economics Research Paper Series (TWERPS) 703, University of Warwick, Department of Economics. [Downloadable!]
  3. Pierre-André Chiappori & Murat Iyigun & Yoram Weiss, 2006. "Investment in Schooling and the Marriage Market," IZA Discussion Papers 2454, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. George J. Mailath & Volker Nocke & Andrew Postlewaite, 2002. "Business Strategy, Human Capital, and Managerial Incentives," PIER Working Paper Archive 03-018, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 23 Jun 2003. [Downloadable!]
    Other versions:
  5. Peters, Michael, 2004. "The Pre-Marital Investment Game," Micro Theory Working Papers peters-04-02-18-01-42-09, Microeconomics.ca Website, revised 13 Sep 2006. [Downloadable!]
    Other versions:
  6. Jansen, Marcel, 2004. "Can Job Competition Prevent Hold-Ups?," IZA Discussion Papers 988, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Harold Cole & George Mailath & Andrew Postlewaite, 2001. "Efficient Non-Contractible Investments in Finite Economies," Advances in Theoretical Economics, Berkeley Electronic Press, vol. 1(advances/), pages 1005-1005. [Downloadable!] (restricted)
  8. Yeon-Koo Che & Ian Gale, 2003. "Optimal Design of Research Contests," American Economic Review, American Economic Association, vol. 93(3), pages 646-671, June. [Downloadable!] (restricted)
    Other versions:
  9. Peters, Michael, 2006. "Truncated Hedonic Equilibrium," Micro Theory Working Papers peters-06-04-11-02-42-39, Microeconomics.ca Website, revised 17 Jan 2007. [Downloadable!]
  10. Professor Yong Kim & Univ. Southern California, 2004. "Asset ownership and Asset Values Over Project Lifecycles," Econometric Society 2004 Far Eastern Meetings 604, Econometric Society. [Downloadable!]
  11. Roman Inderst & Christian Wey, 2003. "Buyer Power and Supplier Incentives," CIG Working Papers SP II 2003-05, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
    Other versions:
  12. Shingo Ishiguro, 2007. "Holdup, Search and Inefficiency," Discussion Papers in Economics and Business 07-13, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
  13. Hoppe, Heidrun C. & Moldovanu, Benny & Sela, Aner, 2006. "The Theory of Assortative Matching Based on Costly Signals," CEPR Discussion Papers 5543, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  14. Jan Eeckhout, . "Competing Norms of Cooperation," Penn CARESS Working Papers fa8d3cedc3b97259070110325, UCLA Department of Economics. [Downloadable!]
  15. Michael Peters & Aloysius Siow, 2001. "Competing Premarital Investment," Working Papers peters-01-02, University of Toronto, Department of Economics. [Downloadable!]
    Other versions:
  16. Kalyan Chatterjee & Y. Chiu, 2007. "When Does Competition Lead to Efficient Investments?," Topics in Theoretical Economics, Berkeley Electronic Press, vol. 7(1), pages 1220-1220. [Downloadable!] (restricted)
  17. Matthew J. Baker & Joyce P. Jacobsen, 2005. "Marriage, Specialization, and the Gender Division of Labor," Wesleyan Economics Working Papers 2005-001, Wesleyan University, Department of Economics. [Downloadable!]
    Other versions:
  18. Roman Inderst & Christian Wey, 2000. "Market Structure, Bargaining, and Technology Choice," CIG Working Papers FS IV 00-12, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  19. Yeon-Koo Che & Jozsef Sakovics, 2006. "The Hold-up Problem," ESE Discussion Papers 142, Edinburgh School of Economics, University of Edinburgh. [Downloadable!]
  20. Peters, Michael, 2004. "Innis Lecture: Hedonic Equilibrium," Micro Theory Working Papers peters-04-07-30-12-06-27, Microeconomics.ca Website, revised 08 Apr 2008. [Downloadable!]
    Other versions:
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