Chapter 10: The holdup game
“Holdup” long ago entered common usage as a description of forcible robbery, typically of travelers on rail or coach, characterized, perhaps apocryphally, by hands held up at gunpoint or knifepoint. By the early twentieth century the term had expanded in the American vernacular to include a form of lawful extortion. John Commons (1924: 59) used “holdup” to describe extreme cases of bargaining, bordering on immorality but not actually illegal. In 1934, William du Pont characterized a threat by the tight-knit Fisher brothers to leave General Motors en masse as “almost a hold up” (Freeland 2000: 58). Victor Goldberg (1976: 439) may be credited with reviving the term and ushering in its modern usage (expressing more formally the folk understanding known to Commons, Coase, and their contemporaries): Before locating its plants at a particular site, a firm will have a number of options [among suppliers], once the relationship has begun [however], the supplier will be isolated to some degree from competition and will be in a position to “hold up” the customer. Among economists presently, however, the classic citation to “holdup” is Klein et al. (1978) and, in particular, their account of Fisher Body holding up General Motors, which is the focus of this chapter.
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