A supplier of metal aluminum serving a Coca-Cola bottler in a large country in Latin America builds a plant along with associated production equipment at an annualized investment cost of $20 million per year. The plant is located directly next to the Coca-Cola bottler's bottling factory, which economizes on transportation costs. The marginal cost of producing a can is $0.20 per can. Under a proposed contract, Coca-Cola will pay the supplier $0.50 per can to produce 100 million cans per year. However, if the can supplier does not sell cans to the Coca-Cola bottler, its best available alternative is to sell cans to a Pepsi bottler. The Pepsi bottler would pay the same price for cans that Coca-Cola would pay and would buy the same number of cans. Even though Pepsi bottler is the closest bottling operation to Coke's, it is located nearly 1,000 miles away, which makes the marginal cost to the can company of selling to Pepsi $0.26 per can.

a) Is there a relationship-specific investment in this case?

b) What is the can producer's rent under the contract with Coca-Cola?

c) What is the can producer's quasi-rent?

d) Suppose the Coca-Cola bottler and the can producer sign a contract at the price of $0.50 per can, but then the Coca-Cola bottler attempts to hold up the can producer. What is the smallest price the can producer would be prepared to accept from the Coca-Cola bottler?

e) Can the can producer holdup the Coca-Cola bottler in this case?