Softening Competition by Enhancing entry: An Example from the Banking Industry
AbstractWe show that competing firms relax overall competition by lowering future barriers to entry.We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclose borrower information.By doing this, they invite rivals to enter their market.Disclosure of borrower information increases an entrant's second-period profits.This dampens competition for serving the first-period market.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2002-86.
Date of creation: 2002
Date of revision:
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Web page: http://center.uvt.nl
competition; banking; access to market; information;
Other versions of this item:
- Jan Bouckaert & Hans Degryse, 2002. "Softening Competition by Enhancing Entry: An Example from the Banking Industry," CSEF Working Papers 85, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Jan Bouckaert & Hans Degryse, 2002. "Softening Competition by Enhancing Entry: An Example from the Banking Industry," CESifo Working Paper Series 782, CESifo Group Munich.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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