Besbes, Omar; Iancu, Dan A.; Trichakis, Nikos - 2017 - This version: February 26, 2017
Firms often finance their inventory through debt and subsequently sell it to generate profits and service the debt …. Pricing of products is consequently driven by both inventory and debt servicing considerations. We show that limited liability … under debt induces sellers to charge higher prices and to discount products at a lower pace. We find that these distortions …
