Sequential Investment, Hold-up and Strategic Delay

Author

Juyuan ZHANG, Southwestern University of Finance and Economics
Yi ZHANG, Singapore Management UniversityFollow

Publication Type

Working Paper

Version

publishedVersion

Publication Date

12-2010

Abstract

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.

Keywords

Sequential Investment, Hold-up, Underinvestment, Strategic Delay

Discipline

Finance

Research Areas

Applied Microeconomics

First Page

1

Last Page

16

Citation

ZHANG, Juyuan and ZHANG, Yi. Sequential Investment, Hold-up and Strategic Delay. (2010). 1-16.
Available at: https://ink.library.smu.edu.sg/soe_research/1472

Copyright Owner and License

Authors

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.