Data/hora: 16/06/2024 00:06:01

Provedor de dados: 	31	
País: 	United States	
Título: 	Uncertainty and Specific Investment with Weak Contract Enforcement	
Autores: 	Swinnen,   Johan F.M.; Vercammen,   James.	
Data: 	2006-05-31	
Ano: 	2006	
Palavras-chave: 	Risk and Uncertainty.	
Resumo: 	The relationship between price uncertainty and specific investment is examined in a dynamic model that integrates the theories of real options and investment holdup.  Because of weak contract enforcement, bilateral firms cannot use a contract to govern their bilateral investment and exchange relationship. These firms instead rely on an implicit self-enforcing agreement, and they reduce the investment distortion by negotiating an ex ante transfer (i.e., the investment expense of one firm is partially paid for by the other firm).  In the absence of uncertainty, the ex ante transfer ensures that investment hold-up is fully eliminated.  Our main result is that uncertainty introduces an inefficiency into the ex ante transfer bargaining game, which in turn causes an inefficiently long delay in investment.  This linkage between higher uncertainty and longer inefficient investment delay has particular relevance for developing and transition economies where high uncertainty and weak contract enforcement is common.	
Tipo: 	Conference Paper or Presentation	
Idioma: 	Inglês	
Identificador: 	21756

http://purl.umn.edu/21044	
Editor: 	AgEcon Search	
Relação: 	American Agricultural Economics Association&gt;2006 Annual meeting, July 23-26, Long Beach, CA

Selected Paper	
Formato: 	29

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