Optimal information transmission in a holdup problem

  title={Optimal information transmission in a holdup problem},
  author={Maria Goltsman},
  journal={The RAND Journal of Economics},
  • Maria Goltsman
  • Published 1 September 2011
  • Economics
  • The RAND Journal of Economics
This article examines the optimal contract in a bilateral trade model with unobservable relationship-specific investment and renegotiation. In such a setting, a contract plays an additional role that it does not have in the standard holdup model, namely that of transmitting information between the parties. The article shows that a partial-disclosure contract may be optimal and describes the optimal contract. If the investment is cooperative and the information between the trading parties is… 

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