Competition and Hold-Ups

Leonardo Felli and Kevin Roberts

Economics Papers from Economics Group, Nuffield College, University of Oxford

Abstract: In an environment in which both workers and firms undertake match specific investments, the presence of market competition for matches may solve the hold-up problems generated by the absence of complete contingent contracts. In particular, this paper shows that in a world in which workers' and firms' investments are separeted by market competition and contracts specify a simple (non-contingent) wage payment, investments are constrained efficient. Indeed, workers and firms invest efficiently given the equilibrium matches in which they are involved.

Keywords: COMPETITION; MARKET STRUCTURE; CONTRACTS (search for similar items in EconPapers)
JEL-codes: D40 L33 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1999
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:1999-w17

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