Markets Can Solve the Hold-Up Problem

Hans Gersbach and Amihai Glazer

Working Papers from California Irvine - School of Social Sciences

Abstract: Some regulatory programs are effective only if firms make some irreversible investments which reduce the cost of compliance. A firm potentially subject to regulation may therefore behave strategically - not investing and thus forcing the regulator to void the proposed regulation. We show that such incentives, which resemble a hold-up problem, may not be overcome when government's only tool is the imposition of an emissions tax.

Keywords: INVESTMENTS; TAXATION; CORPORATIONS; GOVERNMENT POLICY (search for similar items in EconPapers)
JEL-codes: D20 D21 D29 (search for similar items in EconPapers)
Pages: 13 pages
Date: 1996
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:calirv:95-96-9

Access Statistics for this paper

More papers in Working Papers from California Irvine - School of Social Sciences UNIVERSITY OF CALIFORNIA IRVINE, SCHOOL OF SOCIAL SCIENCES, IRVINECALIFORNIA 91717 U.S.A..
Bibliographic data for series maintained by Thomas Krichel ().