Credit rationing as a (temporary) suboptimal equilibrium with imperfect information

Jaffee and Russell (1976) characterized partial rationing as a contract rate and contract size below those of the no-rationing equilibrium. Their non-price rationing here obtains as a suboptimal equilibrium for a risk-averse rate-setting intermediary with marginal increasing cost and a monopolistically competitive loan demand. The temporary (dis)equilibrium corresponds to a dominated strategy, and the wider class of models of which J-R's solution is but a singular case is touched upon.