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MENTAL MODEL · M3143

Hold-up Problem

Hold-up Problem
BusinessHigh supportEconomics
Included
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Version 1.0.0 · Updated 2026-07-31

CORE DEFINITION

When one party makes a specific investment for a transaction (an investment that cannot be easily redeployed), the other party exploits this specificity ex post to demand renegotiation of contract terms, thereby capturing the quasi-rents of the investing party.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

Investment protection mechanism. It explains why firms vertically integrate, or why suppliers are reluctant to make specific investments for a single customer. In designing cooperative relationships, such opportunistic behavior needs to be prevented through long-term contracts, collateral mechanisms, or reputation constraints.

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The 'Hold-up problem' may also refer to mathematical problems related to Hölder's inequality or conditions, involving norm relations and optimization constraints in function spaces; the specific meaning depends on the context.

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Hold-up_problemZH · Explicit
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