Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/97713
Authors: 
Inderst, Roman
Year of Publication: 
2009
Series/Report no.: 
IMFS Working Paper Series 32
Abstract: 
We present a simple model of personal finance in which an incumbent lender has an information advantage vis-a-vis both potential competitors and households. In order to extract more consumer surplus, a lender with sufficient market power may engage in irresponsiblelending, approving credit even if this is knowingly against a household’s best interest. Unless rival lenders are equally well informed, competition may reduce welfare. This holds, in particular, if less informed rivals can free ride on the incumbent’s superior screening ability.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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