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Holdup and Innovation

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Abstract

This paper examines the incentive to oppose innovation (or to delay agreement) when: there are multiple periods; previous outcomes affect the subsequent distribution of surplus; contracts are incomplete; and the parties are wealth constrained. Current agreements affect the parties, claim on future surplus either by altering their default payoffs (historical bargaining/contractual positions) or by changing their relative contemporaneous bargaining strengths. Delay will occur at different times depending on which assumption applies.

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Correspondence to Andrew Wait.

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Wait, A. Holdup and Innovation. J Econ 85, 277–295 (2005). https://doi.org/10.1007/s00712-005-0130-1

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  • DOI: https://doi.org/10.1007/s00712-005-0130-1

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