We construct a model in which a first mover decides on its location before it knows the identity of the second mover; joint location results in a negative externality. Contracts are inherently incomplete since the first mover's initial location decision cannot be specified to an anonymous second...

We construct a model in which an investment opportunity arises for a first mover before it knows the identity of a second mover and in which joint location results in a negative externality. Contracts are inherently incomplete since the first mover cannot bargain over its ex ante investment...