2015 Fiscal Year Final Research Report
On the Asset Substitution Problem and the Optimal Debt Contract with a Consideration of the Debt Collection Rules and the Quantity-Setting Competition
| Project/Area Number |
25870424
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| Research Category |
Grant-in-Aid for Young Scientists (B)
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| Allocation Type | Multi-year Fund |
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| Research Field |
Money/ Finance
Public finance/Public economy
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| Research Institution | Hosei University |
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Principal Investigator |
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| Project Period (FY) |
2013-04-01 – 2016-03-31
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| Keywords | 契約理論 / 寡占理論 |
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| Outline of Final Research Achievements |
I study an optimal debt contracting problem and its resulting capital allocation with a firm confronting the asset substitution problem. Then, I show that (i) the first-best borrowing and allocation result is achievable when and only when the firm’s initial wealth is not less than a sufficient level and that (ii) the asset substitution does not occur but the optimum amount of borrowing is less than the first-best level when the initial wealth level is insufficient but comparatively high and the asset substitution does occur when it is not the case. Further, I study an effect on the competition outcome and then show that (i) the realization of asset substitution can increase the aggregate output in less competitive market and consequently heighten the social welfare as a whole and that (ii) a financial improvement in the asset level can damage the financial status in the cash-flow level and lower the social welfare as a whole, moreover.
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| Free Research Field |
企業金融論
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