Markets Can Solve the Hold-Up Problem
Some 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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|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.|
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