Avoiding the possibility of hold-up problems can lead to the problem of:
A)relationship-specific contracts.
B)low switching costs.
C)high switching costs.
D)underinvestment.

Question

Quizplus · Accepted Answer

Avoiding hold-up problems often leads to underinvestment because parties may be reluctant to invest in relationship-specific assets if they fear that the other party may act opportunistically in the future.

Avoiding the Possibility of Hold-Up Problems Can Lead to the Problem