Efficiency, Leverage and Exit: The Role of Information Asymmetry in Concentrated Industries
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چکیده
This paper develops a real options model of imperfect competition with asymmetric information that analyzes firms’ exit decisions. Optimal exit decision is linked to firm characteristics such as financial leverage and efficiency. The model shows that informational asymmetries between product market rivals can lead more efficient and less leveraged firms to leave the product market prematurely. Moreover, the firm’s debt capacity is bounded by the rival firms’ leverage. JEL: C73, D82, G32, L13
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