If firms anticipate that they are at risk of being held up,firms are more likely to adopt contracts or organizational forms such as
A)investments in reputation
B)mergers
C)exchange of "hostages"
D)All the above

Question

Quizplus · Accepted Answer

Firms that anticipate being held up are more likely to adopt strategies that reduce the risks of hold up problems. These strategies can include investments in reputation, such as building a strong brand or maintaining good relationships with customers and stakeholders. Mergers, acquisitions or partnerships with suppliers or customers can also help to reduce hold up problems by creating joint or aligned interests. Finally, exchange of "hostages" is also a strategy employed by some firms where they agree to lock-in each other, by committing to long-term contracts that are mutually beneficial. Therefore, all the above options are viable ways to reduce hold up problems, and firms may adopt one or more of these strategies depending on their specific situation.

If Firms Anticipate That They Are at Risk of Being