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This paper explores the private and social benefits from barter exchange in a monetized economy. We first prove a no-trade theorem regarding the ability of firms with double-coincidences-of-wants to negotiate improvements in trade among themselves relative to the market outcomes. We then...
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The paper investigates the relationship between bank interest rate margins and collateral for loans issued to new … ventures. The analysis finds a convex U-shaped relationship. The results indicate that while provision of collateral initially …
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collateral good more highly than does the lender; otherwise the optimal contract does not resemble debt. Limited collateral can …
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paid. The second good thus serves as collateral, and is essential in nontrivial contracts in order to satisfy incentive … absolute risk aversion of the borrower is nonincreasing. The amount of the collateral good available to the borrower can …
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