Self-enforcing trade credit

被引:11
|
作者
Troya-Martinez, Marta [1 ]
机构
[1] New Econ Sch, Moscow, Russia
关键词
Limited enforcement; Trade credit; Imperfect monitoring; Debt contract; RELATIONAL CONTRACTS; COURTS;
D O I
10.1016/j.ijindorg.2017.03.001
中图分类号
F [经济];
学科分类号
02 ;
摘要
Trade credit plays a very important role in inter-firm transactions. Because formal contracts are often unavailable, it is granted within an ongoing relationship. We characterize the optimal self-enforcing contract, when the ability to repay is unknown to the supplier and the threat of trade suspension is used to discipline the buyer. The optimal contract resembles a debt contract: if the fixed repayment is met, the contract is renewed. Otherwise, the supplier demands the highest feasible repayment and suspends trade for some time. The length of the trade suspension is contingent on the repayment. We provide a novel explanation for why the quantity is undersupplied, even when a repayment is met. (C) 2017 Elsevier B.V. All rights reserved.
引用
收藏
页码:333 / 357
页数:25
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