5-2. OEM Hold-Up Suppose you work for an original equipment manufacturer (OEM) who makes component pieces for a telecommunications company. The telecom company asks you for a price quote for 2,000,000 units that will require a $1,000,000 investment with marginal costs of $1.

What is your bottom line in negotiations with the telecom? Suppose you agree on a price slightly above your bottom line. Immediately after quoting this price to the telecom company, you receive a faxed purchase order for one million units. What should you do?