Procurement and predation: Dynamic sourcing from financially constrained suppliers

Arve, Malin

doi:10.1016/j.jpubeco.2014.09.007

Cited by 11 publications

(4 citation statements)

References 24 publications

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“…Following Faure-Grimaud (2000), other important papers have used this restricted approach, including (but may not be restricted to) Faure-Grimaud and Mariotti (1999), Povel and Raith (2004a), Hege and Hennessy (2010), Khanna and Schroder (2010), Arve (2014), and Tamayo (2015). 6 Clearly this approach simplifies the analysis considerably, because (IC') immediately implies that…”

Section: Discussionmentioning

confidence: 99%

Incentive-compatibility, limited liability and costly liquidation in financial contracting

Gui

Thadden

Zhao

2019

Games and Economic Behavior

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We characterize an optimal financial contract when the firm's realized cash flow is unobservable to the investor and the firm's collateral can only be liquidated partially by resorting to the services of a costly third party. An optimal contract may exhibit a piecewise structure and vary with the liquidation cost and the firm's actual liquidity shortage. Partial liquidation and wholesale transfers of collateral can coexist in an optimal contract. In contrast to part of the literature, the incentive-compatibility constraint incorporates the firm's limited liability, and may be slack at the optimum. Allowing the firm to overcome an ex-post liquidity shortage by borrowing surreptitiously from a third party may reduce the firm's ex-ante expected utility.

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Section: Discussionmentioning

confidence: 99%

Incentive-compatibility, limited liability and costly liquidation in financial contracting

Gui

Thadden

Zhao

2019

Games and Economic Behavior

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“…5 See Abraham and Schmukler (2017) and references therein. 6 See Arve (2014) for an analysis of the interaction between financially constrained and unconstrained firms in traditional public procurement.…”

Section: Introductionmentioning

confidence: 99%

The Role of Budget Constraints in Sequential Elimination Tournaments*

Arve

Chiappinelli

2021

Scandinavian J Economics

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Motivated by the EU concept of Pre-Commercial Procurement and the massive presence of SMEs in the European economy, we study how budget constraints affect R&D effort in sequential elimination tournaments. We show that introducing budget constraints leads to a non-monotonicity in unconstrained contestants' effort.Furthermore, we show that if the budget asymmetry is not too large, unconstrained contestants exert higher effort than when faced with unconstrained contestants only.

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“…Branco (2002), for instance, shows that protection of inefficient firms may have perverse effects on incentives that lead firms to adopt more efficient technologies. Arve (2014) shows that favoring financially weak firms today may reduce the financially strong player's expected future gains, thereby increasing the government intertemporal payoff. Differently, Cisternas and Figueroa (2015) show that favoring the incumbent in the future induces more competition today.…”

Section: Introductionmentioning

confidence: 99%