Reservation Prices on Credit Use: A Measure of Response to Uncertainty

Peter J. Barry and C. B. Baker

American Journal of Agricultural Economics, 1971, vol. 53, issue 2, 222-227

Abstract: Liquidity in the form of reserved credit is valuable to a business manager because it is available to counter uncertain expectations. This paper investigates the definition and method of estimating values or reservation prices associated with firm liquidity provided by unused credit. A multiperiod linear programming model is taken to reflect the behavior of decision makers in empirically observed situations. Credit reservation prices of decision makers were inferred by comparing growth information for real borrowers with growth information generated by the comparable model at alternative reservation prices. This method succeeded in associating a high credit reservation price with the conservative borrower and low credit reservation prices with a more liberal borrower.

Date: 1971
References: Add references at CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
http://hdl.handle.net/10.2307/1237435 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:53:y:1971:i:2:p:222-227.

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().