Mando Faces Hold-Up Problem (The Mandalorian- Episode 1)

Mando meets with Greef Karga, who he captured a few prisoners for, now faces a new price after he has already done the work. Mando must either accept imperial credits (which he does not want as the Empire has fallen) or Calamari Flan (but he will only get half of the agreed-upon amount). As he has no other buyer, he can complain, but eventually he must accept the new terms. This is known as a Hold-Up Problem. Hold-up Problems occur when there is an upfront investment (capital, or in this case, time invested in captures), but there is a Monopsony, or a market with only a single buyer. Once the upfront investment occurs, the buyer is in a strong position as they know that the seller can sell to no one else. This is often solved with very strong contracts or vertical integration. Learn more about the Hold-Up Problem and Monopsony in this clip!

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