K. Hoff et Je. Stiglitz, MONEYLENDERS AND BANKERS - PRICE-INCREASING SUBSIDIES IN A MONOPOLISTICALLY COMPETITIVE MARKET, Journal of development economics, 52(2), 1997, pp. 429-462
In many areas of the world, a significant part of the cost of obtainin
g a good or service is the cost of enforcing the contracts entailed in
its provision. We present models of markets with endogenous enforceme
nt costs, motivated by studies of rural credit markets. We show that s
ubsidies may have perverse effects under monopolistic competition, inc
reasing,prices or inducing exit. Higher prices (interest rates) result
from the loss of scale economies or from negative externalities among
suppliers. The models are consistent with the puzzling evidence that
infusions of government-subsidized formal credit have not improved the
terms offered by moneylenders. (C) 1997 Elsevier Science B.V.