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The Welfare Implications of Costly Monitoring in the Credit Market: A Note

Bin Xu
The Economic Journal
Vol. 110, No. 463 (Apr., 2000), pp. 576-580
Published by: Wiley on behalf of the Royal Economic Society
Stable URL: http://www.jstor.org/stable/2566248
Page Count: 5
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Welfare Implications of Costly Monitoring in the Credit Market: A Note
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Abstract

Hillier and Worrall (1994) derived a surprising result that credit should be further rationed in the costly-monitoring credit-rationing equilibrium. This note shows that their result may be reversed if monitoring costs are endogenously determined.

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