Capital stock management during a recession that freezes credit markets

摘要

This paper considers the problem of how to price a conspicuous product while maintaining liquidity during a recession which both reduces demand and freezes credit markets. Reducing price would help maintain cash flow, but low prices can erode brand image and, hence, long-term sales. The paper extends earlier work of the same authors by explicitly deriving a firm's optimal cash management behavior, taking into account that a too low cash level results in bankruptcy.n There are different sets of