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dc.contributor.authorGALE, Douglas
dc.contributor.authorGOTTARDI, Piero
dc.date.accessioned2011-06-07T10:48:45Z
dc.date.available2011-06-07T10:48:45Z
dc.date.issued2011-01-01
dc.identifier.citationAmerican Economic Journal: Microeconomics, 2011, 3, 2, 1-37en
dc.identifier.urihttp://hdl.handle.net/1814/17715
dc.description.abstractWe study a competitive model in which market incompleteness implies that debt-financed firms may default in some states of nature, and default may lead to the sale of the firms' assets at fire sale prices when a finance constraint is binding. The anticipation of such "losses" alone may distort firms' investment decisions. We characterize the conditions under which fire sales occur in equilibrium, and their consequences on firms' investment decisions. We also show that endogenous financial crises may arise in this environment, with asset prices collapsing as a result of pure self-fulfilling beliefs. Finally, we examine alternative interventions to restore the efficiency of equilibria.en
dc.language.isoenen
dc.relation.ispartofAmerican Economic Journal: Microeconomicsen
dc.titleBankruptcy, Finance Constraints, and the Value of the Firmen
dc.typeArticleen
dc.identifier.doi10.1257/mic.3.2.1
dc.neeo.contributorGALE|Douglas|aut|
dc.neeo.contributorGOTTARDI|Piero|aut|EUI70004
dc.identifier.volume3en
dc.identifier.startpage1en
dc.identifier.endpage37en


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