Thumbnail
Access Restriction
Open

Author Elliott, Matthew
Source CiteSeerX
Content type Text
File Format PDF
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Abstract In many markets relationship specific investments are necessary to enable trade. Typically there are multiple buyers, multiple sellers and heterogeneous gains from trade. In some markets a buyer and seller must make different and separate investments to trade, in others investments are jointly made and negotiated. These investments are subject to inefficiencies: under-investment, due to potential hold-up, and over-investment to generate “outside options”. When investments are separate over-investment is limited. In contrast, inefficiency from under-investment cannot be bounded. This result reverses when investments are negotiated. In this setting there is no under-investment. However, inefficiency from over-investment cannot now be bounded.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Publisher Date 2010-01-01