Anti - Competitive Financial Contracting : The Design of Financial Claims  

Oleh:

White, Lucy ; Cestone, Giacinta

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Journal of Finance (EBSCO) vol. 58 no. 5 (Oct. 2003), page 2109-2142.
Topik: FINANCIAL; capital markets; investment policy; mathematical models; competition; studies
Fulltext: p 2109.pdf (305.75KB)

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ88 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

This paper presents the first model where entry deterrence takes place through financial rather than product - market channels. In existing models, a firm's choice of financial instruments deters entry by affecting product market behaviour, here entry deterrence occurs by affecting the credit market behavior of investors towards entrant firms. We find that to deter entry, the claims held on incumbent firms should be sufficiently risky, that is, equity. This contrasts with the standard Brander and Lewis (1986) result that debt deters entry. This effect is more marked the less competitive the credit market is - so more credit market competition spurs more product market competition.

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