Timing of investments, holdup and total welfare

Vladimir Smirnov, Andrew Wait*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)


We explore holdup with simultaneous and sequential investment. With simultaneous investment both investors are held up. With sequential investment contracting becomes possible after the project has commenced, so the second investor avoids being held up. If the investments are independent sequential investment: increases cost of delay; reduces the incentive for the first player to invest; and increases the second player's incentive to invest. The paper shows the timing of investment can act as an additional form of holdup; if they have the option when to invest, a party may choose the regime that does not maximize total welfare.

Original languageEnglish
Pages (from-to)413-425
Number of pages13
JournalInternational Journal of Industrial Organization
Issue number3
Publication statusPublished - Mar 2004


  • Holdup
  • Sequencing


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