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The outside option of the worker i.e.e
Union (i)'s outside option is equal to zero.
According to the outside option principle the holdup problem can be solved when the non-investor has a binding outside option.
The decision maker has an outside option that functions as a default alternative.
However, the worker's outside option is likely to be a function of individual characteristics.
In case of breakdown of negotiations, the outside option of both parties equals zero.
Let us assume that the outside option of a new salaried doctor is equal to zero.
After that, the outside option (leisure and home production) is more attractive.
This is so because the MNE reduces unions' outside option from (D_j^*) to zero.
MNE subsidiary (i)'s outside option in the absence of coordination equals zero.
The present paper explores the scope of universal possibility and impossibility theorems for an exogenously given outside option as well as for situations where the outside option is a matter of design.
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