We investigate hold-up with simultaneous and sequential investment. We show that if the encouragement effect of sequential complementary investments dominates the delay effect, sequential investment alleviates the underinvestment caused by the hold-up problem. Further, if it is allowed to choose when to invest, strategic delay occurs when the encouragement effect of sequential complementary investments dominates the delay effect.
Sequential Investment, Hold-up, Underinvestment, Strategic Delay
ZHANG, Yi and Zhang, Juyuan.
Sequential Investment, Hold-up and Strategic Delay. (2014). Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/1472
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