This paper develops a dynamic two-country neoclassical stochastic growth model with incomplete markets. Short-term credit flows can be excessive and reverse suddenly. The equilibrium outcome is constrained inefficient. First, an undercapitalized country borrows too much since each individual firm does not internalize that an increase in production capacity undermines their output price and ther...

This paper analyzes the role of credit frictions in a trade model where producers differ their capabilities to conduct process and quality innovations require external finance for investments. Accounting cost-based quality-based sorting firms unified framework allows us demonstrate that reactions prices commonly used productivity measures do not necessarily reflect welfare implications. Credit ...

In recent researches, vendor managed inventory (VMI) policy is rarely considered for deteriorating items.   This study considered the supply chain partner’s collaboration via a VMI system and provided an EOQ model for a two-level supply chain (single supplier - single retailer) to examine the inventory management proceedings for VMI and non-VMI supply chains. By a new approach in modeling, the ...

Motivated by a particular multinational cutting-tools manufacturer, we extend the traditional economic order quantity (EOQ) model for maintenance-repair-and-overhaul (MRO) customers under stochastic purchase price and use it to show how price variance leads to bullwhip effect for the MRO manufacturer despite constant consumption by the customer. Our extension of the EOQ model is based on two as...

â â â  â  zahra zamani [1] â â  seyed komail tayebi â  department of economics, university of isfahan, iran â â department of economics, university of isfahan, iran â â â  abstract â  international trade causes that markets to become more competitive and small-medium sized enterprises (smes) learn to compete effectively within this increasingly competitive global market place. smes are able to ...

As an integrated part of a supply contract, trade credit has intrinsic connections with supply chain contracting and inventory management. Using a stylized model that explicitly captures the interaction of firms’ operations decisions and financial risks, this paper attempts to develop a deeper understanding of trade credit from an operational perspective. Revolving around the question of what r...

The enlargement of the general-equilibrium structure to allow for default subject to appropriate credit limits and default penalties results in a construction of a simple mechanism for a credit using society. We show that there generically exists a price-normalizing bundle that determines a credit money along with appropriate credit limits and default penalties for the credit mechanism to selec...