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The Hold Up Problem Arises

Question 21

Multiple Choice

The hold up problem arises


A) if firms invest in specific capital and so have incurred a sunk cost which is vulnerable to expropriation.
B) if firms invest in general capital and so have incurred a sunk cost which is vulnerable to expropriation.
C) if firms invest in specific capital and so workers have an incentive to leave the firm and waste the investment.
D) if firms invest in general capital and so workers have an incentive to leave the firm and waste the investment.
E) if specific investments made by the firm will create inefficiencies.

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