The Inadequacy of specificity and role of importance in explaining

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The Inadequacy of specificity and role of importance in explaining

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dc.contributor.author Lage Hansen, Jakob en_US
dc.date.accessioned 2009-02-04T10:25:23Z
dc.date.available 2009-02-04T10:25:23Z
dc.date.issued 2004-03-18T00:00:00Z en_US
dc.identifier.uri http://hdl.handle.net/10398/6883
dc.description.abstract It is argued that specificity is inadequate to explain hold-up, as the definition is imprecise as to which party incurs a loss if an asset is redeployed. If both parties to a transaction incur a loss when an asset is redeployed, neither party can credibly hold up the other party. Also the concept does not address expectations. It is the expected loss (not the actual loss) of parties that will drive attempts at hold-up. Therefore focusing on specificity when talking hold-up can be misleading. As a consequence the concept of importance is introduced. The importance of an asset to a firm is the expected loss to the firm if access to the asset is lost. Various determinants of importance are discussed by using a formal framework. Implications are forwarded, and it is argued that the relative importance of the parties has to change for hold-up to occur. One-sided specific investments inherently lead to mutual importance, which mitigates hold-up. Situations without specificity can lead to hold-up if expectations are asymmetric. Lastly, hold-up does not imply a hold-up problem. en_US
dc.format.extent 15 s. en_US
dc.language eng en_US
dc.relation.ispartofseries LINK Working papers;2002-13 en_US
dc.subject.other kep en_US
dc.title The Inadequacy of specificity and role of importance in explaining en_US
dc.type wp en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department Institut for International Økonomi og Virksomhedsledelse
dc.contributor.departmentshort INT
dc.contributor.departmentuk Department of International Economics and Management
dc.contributor.departmentukshort INT
dc.idnumber x656406223 en_US
dc.publisher.city København en_US
dc.publisher.year 2002 en_US


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