License Prices for Financially Constrained Firms
نویسندگان
چکیده
It is often alleged that high auction prices inhibit build-out. We investigate this claim under the extreme case of budget-constrained bidders. Low prices maximize overall the gains from trade. If there are n licenses, the price where the budget constraint just binds maximizes consumer surplus if the elasticity of demand is less than one plus 1/n. If demand is elastic, auctions maximize consumer surplus when build-out expenditure greater than one over the elasticity of demand. This appears to be true for most of the auctions run. Correspondence to: R. Preston McAfee, 228-77 Caltech, Pasadena, CA 91125, USA, [email protected]. * Burguet acknowledges financial assistance of Barcelona Economics, CREA. Barcelona Economics W no 224
منابع مشابه
Financial Constraints and Exports ∗
My new findings from firm-level surveys show that both a firm’s probability of exporting and a firm’s exporting volume increase with the firm’s age after controlling productivity as well as that both probability of and quantity of export are higher among financially non-constrained firms, after controlling age and productivity. This paper develops a model with credit-constrained, heterogeneous ...
متن کاملLiquidity Demand of Heterogeneous Firms in the Economy of Iran: Microfoundation Approach
One of the main reasons in economic recession is the liquidity constraints of economic firms. When external finance becomes expensive for firms, money demand will act as a buffer stock. Actually, firms reduce unfavorable effect of liquidity constraints by holding money. In this study, after extracting firms liquidity demand function based on micro foundations and creating an index for firms liq...
متن کاملFinancial Frictions and Reaction of Stock Prices to Monetary Policy Shocks
This paper reveals a new theoretical implication of the credit channel of monetary policy: the stock prices of financially more constrained firms are less responsive to monetary policy shocks. In order to study this implication, we use Enron scandal as an exogenous increase in the monitoring cost of the Arthur Andersen clients relative to other firms. We find that Arthur Andersen clients’stock ...
متن کاملFixed investment/fundamental sensitivities under financial constraints
While most models with financial market imperfections predict investment by financially constrained firms to be more sensitive to financial variables, contracting models argue that investment by such firms should be more sensitive to fundamental determinants of investment because fundamentals capture both investment opportunities and changes in the financial position. By first grouping U.S. man...
متن کاملCapital Investment and Determinants of Financial Constraints in Estonia
Unlike previous empirical work concerning investment behavior and the determinants of liquidity constraints, we use a switching regression framework when sample separation is unknown and endogenous and firms are assumed to operate either in the financially constrained or in the financially unconstrained regime. By using new panel data for Estonian companies during 1993 through 2002 we find that...
متن کامل