Speaker: Peter Feldhutter & Gur Huberman
- Gur Huberman
Title: Monopoly Without a Monopolist: An Economic Analysis of the Bitcoin Payment System
Abstract: Owned by nobody and controlled by an almost immutable protocol, the Bitcoin payment system is a platform with two main constituencies: users and profit-seeking miners who maintain the system's infrastructure. The paper seeks to understand the economics of the system: How does the system raise revenue to pay for its infrastructure? How are usage fees determined? How much infrastructure is deployed? What are the implications of changing parameters in the protocol? A simplified economic model that captures the system's properties answers these questions. Transaction fees and infrastructure level are determined in an equilibrium of a congestion queueing game derived from the system's limited throughput. The system eliminates dead-weight loss from monopoly, but introduces other inefficiencies and requires congestion to raise revenue and fund infrastructure. We explore the future potential of such systems and provide design suggestions.
- Peter Feldhutter
Title: Leveraged Buyouts and Credit Spreads
Abstract: What is the impact of LBO restructuring risk on corporate credit spreads? We show that LBO risk increases credit spreads significantly by showing that a) intra-industry credit spreads increase upon an LBO announcement, b) yields on bonds without event risk covenants are, on average, 22bps higher than those on same-firm bonds with such covenants and c) structural models calibrated to historical LBO events imply an impact on 10-year credit spreads of 18-21bps. We also show that the impact is strongest in expansion periods, for bonds with maturities of 10-20 years, and in less competitive industries.