The paper reconsiders the hold-up problem in long-term bilateral trade with specific investments. In our framework, the parties face several trading opportunities (goods) whose characteristics cannot be described at the start of the relationship. Specifically, there exists an investment...

Recent concern has arisen with regard to the potential for introducing competition in previously protected sectors as customer switching costs may make entry (and hence, aggressive price competition) difficult to achieve. An excellent example of this arises telecommunications deregulation with...

We develop a model of bilateral contracting in a dynamic market setting. Asset owners must be paired via a matching process in order to form productive relationships involving long-term investments and ongoing effort. Market frictions shape the owners' incentives to invest in the absence of...