---
slug: hold_up_problem
name: Hold-Up Problem
one_liner: "After one party sinks a relationship-specific investment, the other can renegotiate to grab the quasi-rent — the ex-post exploitation pole whose ex-ante commitment dual is relationship_specific_investment."
type: prime
schema_version: 2
status: density_v2_draft
categories: [economic, social, systemic]
origin_domain: transaction_cost_economics
alternate_origin_domains: [contract_theory, organizational_economics, game_theory]
aliases: [holdup, opportunistic_renegotiation, quasi_rent_expropriation, post_investment_expropriation, lock_in_exploitation]
related: []
solution_archetypes: []
review_flags:
- "OPERATOR-DERIVED (op-01 dualization, sub-flavor 1c) — the ex-post-exploitation dual of `relationship_specific_investment` along the timing/agency axis (who acts, and when, on the asymmetric exposure the investment creates). Discovered in the op-01 full sweep 2026-07-03. Verified absent via search_prime + slug check; no existing hold-up / opportunistic-renegotiation prime. STATUS: RECOMMENDED ACCEPT (classic econ pair-completion)."
- "Created 2026-07-03; STUB ONLY (frontmatter + Core Idea + Notes). Did NOT go through Phase-A triage. SI/SF/similarity grades are PROPOSER ESTIMATES pending triangulation. Body sections (Structural Signature onward) NOT yet written."
- "Phase-C action: re-similarity check vs relationship_specific_investment / opportunism / lock_in / bargaining_power / commitment to confirm it names the ex-post action rather than restating the ex-ante exposure; draw the pair-completion edge to relationship_specific_investment at incorporation. one_liner must be synced to a v1 draft per CLAUDE.md before merge."
substrate_independence:
  composite_substrate_independence: 3
  domain_breadth: 3
  structural_abstraction: 3
  transfer_evidence: 3
  reasoning: 'The core structure — one party sinks an asset whose value is locked to a relationship, then the counterparty exploits that lock-in to renegotiate and capture the quasi-rent — is stateable in agent-neutral terms (an actor becomes vulnerable by committing, a second actor extracts the surplus the commitment created), giving moderate structural abstraction (3). It recurs beyond its transaction-cost home: employer/employee after firm-specific skills, a nation after a foreign firm builds an immovable plant, open-source projects dependent on a maintainer, even biological mutualisms where one partner over-commits. But the sharpest, best-theorized instances are economic and contractual, and the pattern is somewhat human-institution-bound (it presupposes agents with bargaining power and enforceable-or-not contracts), so domain breadth, transfer evidence, and the composite all sit at 3 — a real but frame-tinged structure, not a medium-neutral universal.'
similarity_to_nearest_existing_prime:
  slug: relationship_specific_investment
  similarity: 0.71
structural_framed:
  label: mixed-framed
  aggregate: 0.5
  criteria: {vocab_travels: 0.4, evaluative_weight: 0.5, institutional_origin: 0.6, human_practice_bound: 0.6, import_vs_recognize: 0.4}
  rationale: 'The hold-up problem carries a real frame. Its origin is institutional/theoretical (transaction-cost and contract economics, Williamson/Klein-Crawford-Alchian), lifting institutional_origin; "opportunism," "quasi-rent," and "renegotiation" are terms that travel with it (vocab_travels 0.4); and it presupposes agents with bargaining power and (in)complete contracts, so it is fairly human-practice-bound (0.6). There is an evaluative tint — hold-up is framed as opportunistic exploitation, a wrong done. Underneath sits a recognizable structural core (commit-then-get-expropriated), so it reads mixed-framed rather than fully framed.'
phase_b_passes_completed: []
---
# Hold-Up Problem

## Core Idea

The hold-up problem is the structure in which *one party sinks a relationship-specific investment, and the counterparty then exploits the resulting lock-in to renegotiate terms and capture the surplus the investment created*. The sequence is what defines it: an ex-ante commitment converts a symmetric relationship into an asymmetric one, and then — ex post, after the resources are irreversibly sunk — the party who did not invest holds the leverage and uses it to demand a larger share (or threaten to walk) than could have been extracted before the commitment was made. It is the *action* pole of a single axis whose other pole is `relationship_specific_investment`: that prime names the vulnerability created (an asset whose value is locked to one relationship, opening a quasi-rent); the hold-up problem names *the exploitation of that vulnerability by the party positioned to seize it*. One is the exposure; the other is the act that cashes the exposure in.

The load-bearing invariants are three. First, an **asymmetric, sunk commitment**: one party has irreversibly invested so that the asset's value inside this relationship exceeds its next-best value outside it — the *quasi-rent*, the gap that becomes the prize. Second, a **leverage flip**: because the investment is sunk and specific, the investing party can no longer credibly threaten to leave (its outside option collapsed the moment it committed), so bargaining power shifts to the counterparty. Third, **ex-post renegotiation toward the quasi-rent**: the counterparty uses that leverage to renegotiate the split, appropriating some or all of the surplus the investment created. The characteristic payoff/cost is a double one and its second half is the deeper point. The immediate cost is *distributional* — the investor is expropriated. The structural cost is *ex ante and efficiency-destroying*: rational agents who *foresee* the hold-up under-invest, or refuse to invest at all, so value-creating relationship-specific investments never happen. Hold-up's true damage is not the transfers it causes but the investments it deters — which is why the whole apparatus of long-term contracts, vertical integration, and hostage-exchange exists to neutralize it.

This is one pattern across substrates wherever a specific, sunk commitment hands leverage to a counterparty. In **firms and supply chains**, a supplier builds a plant next to a single buyer's factory (an asset worthless elsewhere) and the buyer then squeezes the price — the canonical case, and the reason firms vertically integrate. In **labor**, a worker who invests in firm-specific skills becomes exploitable by the employer, and an employer who trains a worker becomes exploitable by a poaching market — hold-up runs both directions. In **international political economy**, a foreign firm sinks an immovable mine or pipeline and the host government then raises taxes or expropriates ("the obsolescing bargain"). In **software and platforms**, a business that builds atop one vendor's API becomes locked in and the vendor raises rents. Across all of them the recognizable move is the same: commit specifically, lose your outside option, and watch the party who kept theirs renegotiate for the surplus your commitment created.

## Notes

**Provenance.** Produced by op-01 dualization, sub-flavor 1c, from the input prime `relationship_specific_investment`. Proposed as the classic economics pair-completion: the ex-post opportunistic-renegotiation counterpart to the ex-ante specific-investment exposure. Strong convergence signal — this is a canonical, heavily-theorized construct (Williamson; Klein, Crawford & Alchian, 1978) that any transaction-cost account treats as the natural partner of specific investment.

**For owner evaluation (keep/cut).** The case FOR: hold-up is one of the most established structures in organizational economics and completes an obvious lattice pair with `relationship_specific_investment` — the investment names the exposure, hold-up names the exploitation of it, and the two together generate the entire under-investment result that motivates contracts and vertical integration. The genuinely prime-worthy content is the *ex-ante efficiency loss* (foreseen hold-up deters value-creating investment), which is a real structural consequence, not a restatement. The specific risks Kurt should weigh: (1) **Restatement / same-axis-collapse risk — the sharpest one.** Hold-up and relationship-specific investment describe the *same situation* from two vantage points; the danger is that hold-up is not a distinct structure but the ex-post *description* of the exposure `relationship_specific_investment` already names. The discriminating question: does hold-up add a load-bearing element the input lacks? It does — the **second agent, the leverage flip, and the ex-post renegotiation act** are absent from the pure investment prime — but Kurt should confirm that increment is enough to warrant a separate node rather than a section within the investment prime. (2) **Frame-heaviness** — this is a mixed-framed candidate (institutional origin, "opportunism"/"quasi-rent" vocabulary, presupposes bargaining agents and contracts); it is more frame-bound than a pure structural prime, and the SF estimate (~0.5) reflects that. Decide whether that level of framing is acceptable or whether the wanted prime is a more abstract "commit-then-get-expropriated" structure of which hold-up is the economic instance. (3) **Screen overlap** with `opportunism`, `lock_in`, and `bargaining_power` — hold-up composes these; check it is not merely their conjunction. If the real find is a `relationship_specific_investment` ↔ `hold_up_problem` dual bracketing a more general `opportunistic_exploitation` structure, say which node should be named.

**At incorporation.** Re-run similarity vs `relationship_specific_investment` (nearest, est. ~0.71), `opportunism`, `lock_in`, `bargaining_power`, and `commitment`; the key check is that hold-up survives as distinct from the investment prime rather than collapsing into its ex-post face. Draw the pair-completion / dual edge `relationship_specific_investment` ↔ `hold_up_problem` (ex-ante exposure ↔ ex-post exploitation), and the composition edges to `opportunism`, `lock_in`, and `bargaining_power`. Sync the `one_liner` to a v1 draft per CLAUDE.md before merge (mirror across v1 and v2 in the same commit).
