Law Commons^™

Asset Specificity And Transaction Structures: A Case Study Of @Home Corporation, Brian Jm Quinn

Brian JM Quinn

This is a case study of asset specific investments, a class of transactions that is well understood in the context of economic theory but that is under-analyzed empirically. Because specific investments are particular to a single location, use or customer, their next best use is of much lower value than the use for which they are initially intended. Consequently, asset specific investments face the threat of ex post opportunism and allocative inefficiency. This contracting problem is particularly difficult when firms that are otherwise rivals must coordinate individual investments to create a shared resource. In such cases, generating credible expectations of …