When is a ?rm likely to face a hold-up problem?
A) When it produces speci?c assets.
B) When it makes its own raw materials.
C) When there are many buyers for its product.
D) When it has no competitors.

Question

Quizplus · Accepted Answer

A firm is likely to face a hold-up problem when it invests in specific assets that are not easily redeployable to other uses or users without loss of value. This situation creates dependency on the parties the firm is doing business with, making it vulnerable to opportunistic behavior.

When Is a ?Rm Likely to Face a Hold-Up Problem