Toward a Theory of Asset Subscription
27 Pages Posted: 26 May 2003
Date Written: March 3, 2003
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: Suggested Citation