Monopoly and Credibility in Asset Markets
نویسنده
چکیده
In a simple economy firms arise because there are economies of scale in intertemporal production. Consequently, agents must borrow in order to produce. Because overlapping generations of workers do not live long enough to make credible promises to repay, infinitely lived patient capitalists are the only producers. However, the behavior of capitalists is imperfectly monitored by the workers. All agents are risk neutral and the output of different capitalists is statistically independent, so adding capitalists neither improves the monitoring technology nor enlarges the set of feasible utilities. Nevertheless, adding more capitalists can increase welfare. We are grateful to National Science Foundation grants SES 89-07999, SES 87-088016 and SES 86-09697 for financial support. Departments of Economics M.I.T. and UCLA.
منابع مشابه
Monopoly and Credibility in Asset Markets: an Example
In a simple economy firms arise because there are economies of scale in intertemporal production. Consequently, agents must borrow in order to produce. Because overlapping generations of workers do not live long enough to make credible promises to repay, infinitely lived patient capitalists are the only producers. However, the behavior of capitalists is imperfectly monitored by the workers. All...
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