Hold-up problem or another problem, Managerial Accounting

According to the Philadelphia Inquirer, in 2004 the city of Philadelphia planned to spend $14 million to convert the Convention Center into an appropriate venue for the Republican Nominating Convention (RNC). The city engaged Devon Design and Construction in a contractual relationship to complete the work, which was supposed to start 48 days prior to the commencement of the RNC on July 26. However, when negotiations between Philadelphia's mayor and the police union broke down, the Philadelphia Police Patrolmen's Association took to the picket lines surrounding the Convention Center and prevented construction crews from beginning the work. The Inquirer reported that "a truck attempting to deliver steel turned around after a crowd of union members stood at a chain-link gate in front of the arena, shouting 'back it up,' and 'respect the line, buddy.'" Moreover, the Inquirer reported that "On-duty police officers, who had been instructed to prevent pickets from restricting access, did not intervene." Given the tight construction schedule, construction delays are reportedly costing about $100,000 per day. Identify the principal-agent problem that exists in this situation. Are the mayor and the city of Philadelphia facing the classical "hold-up problem" or another problem? Explain. 

Posted Date: 3/12/2013 8:25:16 AM | Location : United States







Related Discussions:- Hold-up problem or another problem, Assignment Help, Ask Question on Hold-up problem or another problem, Get Answer, Expert's Help, Hold-up problem or another problem Discussions

Write discussion on Hold-up problem or another problem
Your posts are moderated
Related Questions
Problem Marginal costing plays a major role in making certain decisions. It provides information to management regarding the behaviour of costs and the incidence of such costs

Explain TWO limitations of using accounting ratios to assess the performance of a firm and suggest how each limitation may be improved

Painter Ltd, which manufactures and sells a single product, is currently producing and selling 102,000 units per month, which represents 85% of its full capacity. Total monthly cos

How to write introduction on strategy plan

Accounts Payable Turnover Ratio is a short-term liquidity measure which is used to calculate the rate at which a company pays off its suppliers. Accounts payable turnover ratio is

The current sales of M/s ABC are Rs.100 lakhs. Through relaxing the credit standards the firm can produce additional sales of Rs.15 lakhs on that bad debt losses would be 10 percen

It is a commitment by a bank to lend a specific amount of funds on demand identifies the maximum amount of unsecured credit the bank will allow the customer to borrow at any time.

Inappropriate standards (or targets): This is a problem arising from deficiencies in planning. If not enough time and resources are devoted to setting accurate standards in th

What is your base rate for graduate level accounting? If I decide to use your service can the tutor and I speak via skype? I''m not located in the U.S.

What value can management derive from a Balance Scorecard? How does the management accountant contribute?