Mälkönen, Ville; Vesala, Timo - In: Oxford Economic Papers 65 (2013) 4, pp. 789-806
We show that two horizontally differentiated banks can implement separating equilibria in markets for bank loans by using non-linear price schedules. The optimal strategies of the banks induce 'high-risk' borrowers to patronize their preferred, that is closer, bank. 'Low-risk' borrowers accept...