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Hold-Up

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The Palgrave Encyclopedia of Strategic Management

Abstract

A hold-up occurs when one transactor takes advantage of another’s lack of comparably valued alternatives to insist on more favourable terms of trade. Opportunities for hold-ups commonly arise where transactions require relationship-specific investments. The potential for a hold-up reduces the efficiency of exchange by causing underinvestment or because efforts to appropriate and protect quasi-rents through bargaining and other rent seeking activities dissipate gains from trade. Avoiding or reducing the potential for hold-up is an often-cited motive for contracting and vertical integration.

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Author information

Authors and Affiliations

  1. University of Michigan, Ross School of Business, 701 Tappan Street, Ann Arbor, MI, USA

    Scott E. Masten

Authors
  1. Scott E. Masten
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Corresponding author

Correspondence to Scott E. Masten .

Editor information

Editors and Affiliations

  1. GSBPP, Naval Postgraduate School, Monterey, CA, USA

    Mie Augier

  2. Berkeley Research Group, LLC, Emeryville, CA, USA

    David J. Teece

  3. Haas School of Business, University of California, Berkeley, Berkeley, CA, USA

    David J. Teece

Copyright information

© 2018 Macmillan Publishers Ltd., part of Springer Nature

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Masten, S.E. (2018). Hold-Up. In: Augier, M., Teece, D.J. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-00772-8_579

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