Holdups and holdouts: What do they have in common?

The holdup and holdout problems arise in different contexts, but they share certain fundamental similarities that have not generally been recognized. This paper characterizes the commonalties between the two problems and their remedies.

► The holdup and holdout problems are often confused. ► Holdups usually arise in contract settings where one party makes a transaction-specific investment prior to trade. ► Holdouts arise in the case of land assembly for large scale development projects. ► This paper uses a simple model to reveal the commonalities between the two problems.