Liquidity constraints and credit subsidies in auctions

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dc.contributor.author Quintero Jaramillo, Jose E.
dc.date.accessioned 2006-11-07T11:13:57Z
dc.date.available 2006-11-07T11:13:57Z
dc.date.issued 2004-01
dc.identifier.uri http://hdl.handle.net/10016/92
dc.description.abstract I consider an auction with participants that differ in valuation and access to liquid assets. Assuming credit is costly (e.g. due to moral hazard considerations) different auction rules establish different ways of screening valuation-liquidity pairs. The paper shows that standard auction forms result in different allocation rules. When the seller can deny access to capital markets or offer credit subsidies, she gains an additional tool to screen agents. The paper derives conditions under which the seller increases profits by way of subsidizing loans. In particular, in a second price auction, the seller always benefits from offering small subsidies. The result extends to a non-auction setting to show that a monopolist may use credit subsidies as a price discrimination device.
dc.format.extent 747128 bytes
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries Workings Paper. Bussiness Economics
dc.relation.ispartofseries 2004-04
dc.title Liquidity constraints and credit subsidies in auctions
dc.type workingPaper
dc.subject.eciencia Empresa
dc.rights.accessRights openAccess
dc.identifier.repec wb040604
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