Optimal trade credit strategies for capital-constrained suppliers
研究了贸易信贷如何影响资本受限供应商的利润，发现低流动性风险或长账期时有利，但竞争和风险水平会改变效果，对供应商和零售商都有复杂影响。
This paper examines how trade credit adoption influences the profitability of capital-constrained suppliers. We develop a game-theoretic model with two suppliers and one retailer, incorporating liquidity risk, accounting periods, and competition. The analysis shows that offering trade credit does not always reduce supplier profits relative to cash transactions; it can be beneficial when liquidity risk is low or accounting periods are extended. Although trade credit may create free-riding effects, competition helps mitigate them. Uniform adoption lowers supplier profits, while heterogeneous adoption has mixed outcomes depending on liquidity risk and competition intensity. When competition is low, trade-credit adoption by a low-risk supplier reduces profits for all suppliers, whereas adoption by a high-risk supplier benefits the offering supplier but harms its rival. Under intense competition, all suppliers’ profits decline. For the retailer, trade credit may also be disadvantageous, particularly under monopoly or low competition with high-risk suppliers. This study provides valuable insights for suppliers by highlighting the complex effects of trade credit in competitive markets. Suppliers should carefully assess liquidity risk and accounting periods, while factoring in competitive dynamics when deciding whether to offer trade credit.