期刊名称:Birkbeck Working Papers in Economics and Finance / School of Economics, Mathematics and Statistics, Birkbeck College
印刷版ISSN:1745-8587
出版年度:2005
卷号:2005
出版社:London University
摘要:We propose a simple theory of trade credit and prepayment. A downstream firm
trades off inventory holding costs against lost sales. Lost final sales impose a negative
externality on the upstream firm. We show that allowing the downstream firm to
pay with a delay, an arrangement known as “trade credit,” is precisely the solution
to the problem. Solving a reverse externality accounts for the use of prepayment
for inputs, even in the absence of any risk of default by the downstream firm.
We clarify previously unexplained facts including the universal presence of a zero-
interest component in trade credit terms, and the non-responsiveness of interest
charges to fluctuations in the bank rate as well as market demand. We explain
why trade credit is short term credit and why the level of provision is negatively
related to sales and profit and inventory, but positively related to the profit margin.
Finally, we show that under trade credit, inventory investment is invariant to the
real interest rate for a wide range of parameters, explaining the puzzle posed by
Blinder and Maccini (1991). This implies that standard empirical inventory models
would gain explanatory power by including the subsidy effect of accounts payable
关键词:Trade credit, prepayment, externality, subsidy, the Burkart-Ellingsen
critique, inventory investment