Suchergebnisse

We present a model of an unsecured loan market. Many lenders simultaneously offer loan contracts (a debt level and an interest rate) to a borrower. The borrower may accept more than one contract. Her payoff if she defaults increases in the total amount borrowed. If this payoff is high enough, deterministic zero-profit equilibria cannot be sustained. Lenders earn a positive profit, and may even charge the monopoly price. The positive-profit equilibria are robust to increases in the number of lenders. Despite the absence of asymmetric information, the competitive outcome does not obtain in the limit. (JEL D43, L13, L14)

One of the principal objectives of Congress in enacting laws to govern federal government contract awards is to insure competition by maximizing the number of contractors who compete for these contracts. To insure full and open competition, the specifications in government contracts must permit all responsible sources of goods, services, and construction to compete for the work. Specifications which are drawn so that only one source or a very limited number of sources can compete for the work may effectively thwart competition. Whether and how to enforce this requirement for competitive specifications during contract performance is this article's subject.