A Monopolistic Credit Rating Agency
AbstractThe paper analyses the demand for credit rating services of a continuum of firms. The firms differ in the probability of their investment's success which is private information. They can use the service of a monopolistic rating agency that sends an imperfect signal of their success probability to the capital market. The demand for rating services turns out to be not always monotonous in its price. If a rating agency exists, only rated firms obtain a credit. There can be oversupply or undersupply of rating services from a social planner's point of view.
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Find related papers by JEL classification:
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-01-21 (All new papers)
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