Schmitz, Patrick W. (2010). Contractual solutions to hold-up problems with quality uncertainty and unobservable investments. J. Math. Econ., 46 (5). S. 807 - 817. LAUSANNE: ELSEVIER SCIENCE SA. ISSN 0304-4068

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Abstract

Consider a seller and a buyer who write a contract. After that, the seller produces a good. She can influence the expected quality of the good by making unobservable investments. Only the seller learns the realized quality. Finally, trade can occur. It is always ex post efficient to trade. Yet, it may be impossible to achieve the first best, even though the risk-neutral parties are symmetrically informed at the contracting stage and complete contracts can be written. The second best is characterized by distortions that are reminiscent of adverse selection models (i.e., models with precontractual private information but without hidden actions). (C) 2010 Elsevier B.V. All rights reserved.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Schmitz, Patrick W.UNSPECIFIEDUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-496488
DOI: 10.1016/j.jmateco.2010.06.003
Journal or Publication Title: J. Math. Econ.
Volume: 46
Number: 5
Page Range: S. 807 - 817
Date: 2010
Publisher: ELSEVIER SCIENCE SA
Place of Publication: LAUSANNE
ISSN: 0304-4068
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
INCOMPLETE CONTRACTS; EFFICIENT MECHANISMS; PROPERTY-RIGHTS; OWNERSHIP; RENEGOTIATION; INFORMATION; IMPLEMENTATION; EXTERNALITIES; COSTSMultiple languages
Economics; Mathematics, Interdisciplinary Applications; Social Sciences, Mathematical MethodsMultiple languages
URI: http://kups.ub.uni-koeln.de/id/eprint/49648

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