Toward a Theory of Asset Subscription

27 Pages Posted: 26 May 2003

See all articles by Danyang Xie

Danyang Xie

Hong Kong University of Science & Technology (HKUST) - Department of Economics

Date Written: March 3, 2003

Abstract

This paper develops an understanding toward a theory of asset subscription. When a firm needs to raise cash from an asset that is too large or too risky for a single individual or financial institution so that an auction method is not applicable, the firm may use a subscription scheme. In this paper, we discuss a Nash subscription (NS) scheme and a sequential subscription (SS) scheme. We characterize the optimal strategy when the value of the asset is known. The comparison between a NS and a SS is provided. The difference between an auction scheme and a subscription scheme is discussed.

Keywords: Nash subscription, sequential subscription, auction

JEL Classification: D43, D44, G12

Suggested Citation

Xie, Danyang, Toward a Theory of Asset Subscription (March 3, 2003). Available at SSRN: https://ssrn.com/abstract=385885 or http://dx.doi.org/10.2139/ssrn.385885

Danyang Xie (Contact Author)

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

Clear Water Bay
Kowloon, Hong Kong
China
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