Abstract

http://ssrn.com/abstract=886733
 
 

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Exclusive Contracts and the Institution of Bankruptcy


Adriano A. Rampini


Duke University

Alberto Bisin


New York University - Leonard N. Stern School of Business - Department of Economics


Economic Theory, Vol. 27, pp. 277-304, 2006

Abstract:     
The paper studies the institution of bankruptcy when exclusive contracts cannot be enforced ex ante, e.g., a bank cannot monitor whether the borrower enters into contracts with other creditors. The institution of bankruptcy enables the bank to enforce its claim to any funds that the borrower has above a fixed bankruptcy protection level. Bankruptcy improves on non-exclusive contractual relationships but is not a perfect substitute for exclusivity ex ante. We characterize the effect of bankruptcy provisions on the equilibrium contracts which borrowers use to raise financing.

Number of Pages in PDF File: 34

Keywords: Bankruptcy, Non-exclusive contracts

JEL Classification: D82, G33, K29

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Date posted: March 6, 2006  

Suggested Citation

Rampini, Adriano A. and Bisin, Alberto, Exclusive Contracts and the Institution of Bankruptcy. Economic Theory, Vol. 27, pp. 277-304, 2006. Available at SSRN: http://ssrn.com/abstract=886733

Contact Information

Adriano A. Rampini (Contact Author)
Duke University ( email )
100 Fuqua Drive
Durham, NC 27708
United States
+1 919 660-7797 (Phone)
+1 919 660-8038 (Fax)
HOME PAGE: http://faculty.fuqua.duke.edu/~rampini/
Alberto Bisin
New York University - Leonard N. Stern School of Business - Department of Economics ( email )
269 Mercer Street
New York, NY 10003
United States
212-998-8916 (Phone)
212-995-4186 (Fax)
Feedback to SSRN


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