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Competition for Natural Resources and the Hold-Up Problem
1 : University of Siegen
We study the role of competition for the hold-up problem in foreign direct
investment in resource-based industries. The host country government is not
only unable to commit not to expropriate investment ex post, but is also
unable to commit to the provision of local resources. In the case of
competition for local resources this dual commitment problem triggers higher
investment levels and increases host country revenues, but hurts profits of
international investors.
