Investments and the holdup problem in a matching market
Bester, Helmut ;  ;  Universität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft

Main titleInvestments and the holdup problem in a matching market
AuthorBester, Helmut
EditorUniversität <Berlin, Freie Universität> / Fachbereich Wirtschaftswissenschaft
No. of Pages22 S.
Series ; 2009,7 : Economics
KeywordsHoldup Problem; Matching Market; Investments
Classification (DDC)338 Production
AbstractThis paper studies investment incentives in the steady state of a dynamic bilateral
matching market. Because of search frictions, both parties in a match are
partially locked-in when they bargain over the joint surplus from their sunk investments.
The associated holdup problem depends on market conditions and is more
important for the long side of the market. In the case of investments in homogenous capital only the agents on the short side acquire ownership of capital. There is always underinvestment on both sides of the market. But when market frictions become negligible, the equilibrium investment levels tend towards the first-best.
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FU DepartmentDepartment Business and Economics
Other affiliation(s)Institut für Wirtschaftstheorie
Year of publication2009
Type of documentBook
Terms of use/Rights Nutzungsbedingungen
Created at2009-07-08 : 08:46:53
Last changed2016-01-05 : 02:38:16
Static URLhttp://edocs.fu-berlin.de/docs/receive/FUDOCS_document_000000002539