Comparing the literature on hold-up and strategic entry deterrence leads to a puzzling role for sunk or specific investments in affecting investor’s incentive. In one case, non-redeployable investments decrease investor’s ex-post bargaining power. In the other they increase it. When the entry deterrence effect is acknowl- edged, the threat of hold-up against investor is largely weakened. Contrary to pre- vious literature, in this respect, asset specificity may even constitute an endogenous enforcement device for incomplete contracts. We conclude that the impact of asset specificity on investor’s post-contractual power, far from being general, depends on the nature of interactions between contractual arrangements and market structure.

Dixit versus Williamson: the ‘fundamental transformation’ reconsidered / Nicita, Antonio; Massimiliano, Vatiero. - In: EUROPEAN JOURNAL OF LAW AND ECONOMICS. - ISSN 1572-9990. - STAMPA. - (2012). [10.1007/s10657-012-9299-2]

Dixit versus Williamson: the ‘fundamental transformation’ reconsidered

NICITA, ANTONIO;
2012

Abstract

Comparing the literature on hold-up and strategic entry deterrence leads to a puzzling role for sunk or specific investments in affecting investor’s incentive. In one case, non-redeployable investments decrease investor’s ex-post bargaining power. In the other they increase it. When the entry deterrence effect is acknowl- edged, the threat of hold-up against investor is largely weakened. Contrary to pre- vious literature, in this respect, asset specificity may even constitute an endogenous enforcement device for incomplete contracts. We conclude that the impact of asset specificity on investor’s post-contractual power, far from being general, depends on the nature of interactions between contractual arrangements and market structure.
2012
01 Pubblicazione su rivista::01a Articolo in rivista
Dixit versus Williamson: the ‘fundamental transformation’ reconsidered / Nicita, Antonio; Massimiliano, Vatiero. - In: EUROPEAN JOURNAL OF LAW AND ECONOMICS. - ISSN 1572-9990. - STAMPA. - (2012). [10.1007/s10657-012-9299-2]
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11573/542464
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