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Does Competition Solve the Hold-Up Problem?

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  • Felli, L.
  • Roberts, K.

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.

Suggested Citation

  • Felli, L. & Roberts, K., 2000. "Does Competition Solve the Hold-Up Problem?," Economics Papers 2000-w11, Economics Group, Nuffield College, University of Oxford.
  • Handle: RePEc:nuf:econwp:2000-w11
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    References listed on IDEAS

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    More about this item

    Keywords

    COMPETITION ; MARKET STRUCTURE;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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