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| Author: | Sen, A. |
| Title: | Seller financing of consumer durables |
| Journal: | Journal of Economics & Management Strategy
1998 : FALL, VOL. 7:3, p. 435-460 |
| Index terms: | CONSUMER DURABLES SELLING FINANCING |
| Language: | eng |
| Abstract: | This study shows that when customers desire consumption smoothing and when financial markets are imperfect, a seller can find it optimal to offer a menu of deferred-payment plans. A monopolist seller price discriminates among customers with different intertemporal income profiles by making such menu offers, and the interest rate on the seller credit can be significantly lower than the market borrowing rate. Seller financing can be an equilibrium outcome in a game where sellers and banks with market power choose payment plans and interest rates strategically. |
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