Journal of Economic Theory and Econometrics: Journal of the Korean Econometric Society
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Journal of Economic Theory and Econometrics
Journal of the Korean Econometric Society

• #### Namhoon Kwon   (Department of Economics, Konkuk University)

Abstract

The paper shows that allowing a simple choice such as initiating temporary disputes can cure the holdup problem. This is despite that the specific investments are two-sided, and the nature of the investment is cooperative, the case in which the hold-up problem is the most difficult to overcome. It is because the dispute'' option generates multiple equilibria for the ex post renegotiation game, and they can be conditioned to enforce efficient investments.

Keywords
Hold-up problem, Incomplete Contracts, Temporary Disputes

JEL classification codes
D23