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Financial institutions may be vulnerable to predatory short selling. When the stock of a financial institution is shorted aggressively, leverage constraints imposed by short-term creditors can force the institution to liquidate long-term investments at fire sale prices. For financial...
Persistent link: https://www.econbiz.de/10013074650
Though economists have made substantial progress toward formulating theories of collusion in industrial cartels that account for a variety of fact patterns, important puzzles remain. Standard models of repeated interaction formalize the observation that cartels keep participants in line through...
Persistent link: https://www.econbiz.de/10013056583
construction of predicted competitive price cost margins that we show to exceed observed margins. We argue that predation occurred …
Persistent link: https://www.econbiz.de/10013221947
predation. I discuss qualitative evidence such as predatory intent expressed in correspondence between cartel members which …
Persistent link: https://www.econbiz.de/10013222218
. Similarly, conventional tests for predation cannot discriminate between practices that increase or decrease consumer welfare in …
Persistent link: https://www.econbiz.de/10013248676
This paper incorporates the economic theory of predation into the theory of economic growth. The analytical framework … offensive weapons. Productive capital forms a basis for accumulation of wealth but in each generation predation can cause both … current generation of the prey dynasty chooses to tolerate predation rather than to deter predation. We also find that over …
Persistent link: https://www.econbiz.de/10013246277
In a model with heterogeneous-risk-aversion agents facing margin constraints, we show how securities' required returns are characterized both by their betas and their margin requirements. Negative shocks to fundamentals make margin constraints bind, lowering risk-free rates and raising Sharpe...
Persistent link: https://www.econbiz.de/10013130262
We measure heterogeneity in risk aversion among households in Thai villages using a full risk-sharing model and complement the results with a measure based on optimal portfolio choice. Among households with relatives living in the same village, full insurance cannot be rejected, suggesting that...
Persistent link: https://www.econbiz.de/10013131495
The VIX, the stock market option-based implied volatility, strongly co-moves with measures of the monetary policy stance. When decomposing the VIX into two components, a proxy for risk aversion and expected stock market volatility ("uncertainty"), we find that a lax monetary policy decreases...
Persistent link: https://www.econbiz.de/10013137030
We develop a dynamic agency model where payout, investment and financing decisions are made by managers who attempt to maximize the rents they take from the firm, subject to a capital market constraint. Managers smooth payout in order to smooth their flow of rents. Total payout (dividends plus...
Persistent link: https://www.econbiz.de/10013139901