Financial intermediation and entry-deterrence
نویسندگان
چکیده
منابع مشابه
Financial Intermediation and Entry Deterrence
In this paper, we analyze the interaction between an incumbent rm's nancial contract with a bank and its product market decisions in the face of the threat of entry, in a dynamic model. The main results of the paper are: there exists a separating equilibrium with no limit pricing; the low-cost incumbent repays more to the bank in the rst period, due to the threat of entry; and there are paramet...
متن کاملFinancial Intermediation and Entry−Deterrence: A survey
In this paper, we summarize the findings of a series of our papers on the relationship between financial contracting and the game of entry−deterrence in a dynamic context.The incumbent has private information about its cost and enters into an agency relationship with a lender in each of the two periods. We examine the effect of this agency relationship on the probability of entry and limit pric...
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We study the relationship between financial contracting and entry deterrence when the potential entrant observes the market price but does not observe the financial contract. This leads to the possibility that the entrant and the lender have different beliefs about the incumbent’s costs, due to uncertainty in the demand for the good. We show that as a result, the incumbent produces a different ...
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The savings/investment process in capitalist economies is organized around financial intermediation, making them a central institution of economic growth. Financial intermediaries are firms that borrow from consumer/savers and lend to companies that need resources for investment. In contrast, in capital markets investors contract directly with firms, creating marketable securities. The prices o...
متن کاملUncertainty and entry deterrence*
We study a model where capacity installation by an incumbent firm serves to deter others from entering the industry. We argue that uncertainty about demand or costs forces the incumbent to choose a higher capacity level than it would under certainty. This higher level diminishes the attractiveness of deter rence (Proposition 1) and, therefore, the range of parameter values for which deterrence ...
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ژورنال
عنوان ژورنال: Economic Theory
سال: 2003
ISSN: 0938-2259,1432-0479
DOI: 10.1007/s00199-002-0351-2