The Financing and Redeployment of Specific Assets  

Oleh:

Habib, Michel ; Johnsen, D. Bruce

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 54 no. 2 (Apr. 1999), page 693-720.
Fulltext: p 693.pdf (203.41KB)

Isi artikel

We model the role various forms of nonrecourse secured debt play in efficiently redeploying assets whose value is state-specific. Ex ante, an entrepreneur and an asset redeployer make noncontractible state-specific investments in the primary and next-best uses of an asset, respectively. The redeployer provides a secured nonrecourse loan equal to the value of the asset in the critical state that separates the good and bad states. In the event of a bad state, this contract averts ex post bargaining over the asset’s quasi-rents on redeployment and leaves the parties’ ex ante investments undistorted.

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