Dynamic Pricing Under Debt: Spiraling Distortions and Efficiency Losses
研究债务下企业定价行为，发现有限责任导致高价和慢折扣，造成收入损失螺旋式下降，并评估债务合同条款的缓解效果。
Firms often finance their inventory through debt and subsequently sell it to generate profits and service the debt. Pricing of products is consequently driven by inventory and debt servicing considerations. We show that limited liability under debt induces sellers to charge higher prices and to discount products at a slower pace. We find that these distortions result in revenue losses that compound over time, leading to some form of performance spiral down. We quantify the extent to which these inefficiencies can be mitigated by practical debt contract terms that emerge as natural remedies from our analysis, and find debt amortization or financial covenants to be the most effective, followed by debt relief and early repayment options. The online appendix is available at https://doi.org/10.1287/mnsc.2017.2862 . This paper was accepted by Serguei Netessine, operations management.