Opportunism in Sequential Investment Settings: On Strategies for Overcoming Holdups and Holdouts
نویسندگان
چکیده
Economic theory suggests that, although the holdup and holdout problems arise in different contexts and are typically treated as disparate, they represent the same underlying economic problem. In particular, both involve an up-front investment that reduces the investor’s bargaining power with the seller of a necessary input and thereby lead to under-investment. This paper explores the implications of this result for interpreting and reconciling the corresponding case law and proposed remedies. It emphasizes the fact that institutional responses to the two problems, though outwardly different, share features that reflect the common source of their inefficiency. Recognizing the similarities can provide guidance for future legal decisions that seek to resolve disputes related to holdups or holdouts in a consistent and economically efficient way.
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تاریخ انتشار 2015