Renegotiation Design and Contract Solutions to the Hold-Up Problem
This paper surveys the literature on contractual solutions to the hold-up problem which has addressed the issue of how to design the optimal contractual arrangement to achieve efficient investments in the presence of contract incompleteness. Although scholars have argued that renegotiation design is a necessary condition to avoid the hold-up problem, some recent papers have seriously questioned this condition. We mainly show that renegotiation design remains a necessary condition to implement efficient investments. Copyright 2006 The Author Journal compilation © 2006 Blackwell Publishing Ltd.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 20 (2006)
Issue (Month): 5 (December)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0950-0804|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0950-0804|
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.:
- Che,Y.-K. & Sakovics,J., 2001.
"A dynamic theory of holdup,"
25, Wisconsin Madison - Social Systems.
- Ilya Segal, 1999. "Complexity and Renegotiation: A Foundation for Incomplete Contracts," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 57-82.
- Che, Yeon-Koo, 2000. "Can a Contract Solve Hold-Up When Investments Have Externalities? A Comment on De Fraja (1999)," Games and Economic Behavior, Elsevier, vol. 33(2), pages 195-205, November.
- Aaron S. Edlin, 1994.
"Cadillac Contracts and Up-Front Payments: Efficient Investment Under Expectation Damages,"
NBER Working Papers
4915, National Bureau of Economic Research, Inc.
- Edlin, Aaron S, 1996. "Cadillac Contracts and Up-Front Payments: Efficient Investment under Expectation Damages," Journal of Law, Economics and Organization, Oxford University Press, vol. 12(1), pages 98-118, April.
- De Fraja, Gianni, 1999. "After You Sir. Hold-Up, Direct Externalities, and Sequential Investment," Games and Economic Behavior, Elsevier, vol. 26(1), pages 22-39, January.
- Schmitz, Patrick W., 2002. "Simple contracts, renegotiation under asymmetric information, and the hold-up problem," European Economic Review, Elsevier, vol. 46(1), pages 169-188, January.
- David de Meza & Ben Lockwood, 1998. "Does Asset Ownership Always Motivate Managers? Outside Options and the Property Rights Theory of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 361-386.
- Eric Maskin & Jean Tirole, 1999. "Unforeseen Contingencies and Incomplete Contracts," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 83-114.
- Schmitz, Patrick W., 2002. "On simple contracts, renegotiation under asymmetric information, and the hold-up problem," MPRA Paper 12530, University Library of Munich, Germany.
- Che, Y.K. & Hausch, D.B., 1997.
"Cooperative Investments and the Value of Contracting,"
9714, Wisconsin Madison - Social Systems.
- Donald B. Hausch & Yeon-Koo Che, 1999. "Cooperative Investments and the Value of Contracting," American Economic Review, American Economic Association, vol. 89(1), pages 125-147, March.
- Aaron S. Edlin & Stefan Reichelstein, 1995.
"Holdups, Standard Breach Remedies, and Optimal Investment,"
NBER Working Papers
5007, National Bureau of Economic Research, Inc.
- Edlin, Aaron S & Reichelstein, Stefan, 1996. "Holdups, Standard Breach Remedies, and Optimal Investment," American Economic Review, American Economic Association, vol. 86(3), pages 478-501, June.
When requesting a correction, please mention this item's handle: RePEc:bla:jecsur:v:20:y:2006:i:5:p:731-756. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.