Gale, Douglas; Gottardi, Piero - London School of Economics (LSE) - 2013
We study a general equilibrium model in which firms choose their capital structure optimally, trading off the tax … rate is zero, the optimal capital structure is indeterminate, there are no fire sales, and the equilibrium is Pareto … efficient. When the tax rate is positive, the optimal capital structure is uniquely determined, default occurs with positive …