Hortacsu, Ali; Matvos, Gregor; Shin, Chaehee; Syverson, Chad - In: American Economic Review 101 (2011) 3, pp. 93-97
We explore the role the feedback loop between firms' financial health and consumers' demand for their products plays in the auto market. We construct a simple model of an automaker making pricing and debt service (continuation) decisions while recognizing that consumers are sensitive to whether...