Price Uncertainty and Credit-Product Interlinkage: A Note

Posted: 27 Jan 2002

Abstract

In the existing theoretical literature on credit-product interlinkage, the trader (interlocker) is not allowed to offer a Fixed-Rental Contract (FRC) where the trader leases-in land from the farmer in exchange of a fixed rent for self-cultivation. But if the trader is allowed to offer an FRC, then the existence and optimality of an interlinked credit-product contract cannot be established. This note purports to provide an explanation for the existence and optimality of an interlinked credit-product contract, even when the trader is allowed to offer an FRC, introducing price uncertainty in the product market.

JEL Classification: Q15, D89

Suggested Citation

Chaudhuri, Sarbajit, Price Uncertainty and Credit-Product Interlinkage: A Note. Available at SSRN: https://ssrn.com/abstract=298461

Sarbajit Chaudhuri (Contact Author)

University of Calcutta ( email )

56A, B.T. Road
Kolkata, West Bengal 700 050
India
+91 33 2557 5082 (Phone)
+91 33 2844 1490 (Fax)

HOME PAGE: http://econpapers.repec.org/RAS/pch11.htm

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