We analyze the effects of bailout policies on borrower surplus in a two-period Hotelling model of competition with switching costs and poaching. Before the second period of competition, banks may sometimes fail or face capacity constraints because of random shocks and uncertain bailouts. If...

We study the incentives of competing banks to outsource their payment services to a common infrastructure, managed by a private third-party provider. The latter stores depositors' information in the cloud and offers compatibility services, but is exposed to cyber risk. In the first-best...

In this paper, we analyze the welfare effects of bailout policies when banks compete with switching costs. We compare no-bailout policies to systematic bailouts. We argue that no-bailout policies increase the interest rates paid by borrowers ex ante (i.e., before a shock), whereas they may...