Contractual signaling, relationship-specific investment and exclusive agreements
- Publication Type:
- Journal Article
- Games and Economic Behavior, 2014, 87 pp. 19 - 33
- Issue Date:
Copyright Clearance Process
- Recently Added
- In Progress
- Closed Access
This item is closed access and not available.
I analyze a model of hold-up with asymmetric information at the contracting stage. The asymmetry of information concerns the value of trade with external parties. I show that contractual signaling and efficiency of investment can conflict if only quantity is contractible. This conflict generates inefficient equilibria in terms of investment. Contracting on exclusivity in addition to quantity resolves the conflict and consequently eliminates the inefficiency of investment. © 2014 Elsevier Inc.
Please use this identifier to cite or link to this item: