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On the Interactions between Capital Structure and Product Markets.A Survey of the Literature


  • T. Franck
  • N. Huyghebaert


This paper surveys capital structure theories based on product characteristics and the structure of input and output markets. In this manner, it extends the work of Harris and Raviv (1991). Simultaneously, we relate capital structure to decisions in the input and output markets, such as production and pricing, investments, and entry and exit. We briefly discuss each of the central papers in these literatures and relate them to the other models. Next, we present the known empirical evidence that either supports or rejects these models. Finally, we offer our conclusions and elaborate on this review article’s implications for future research.

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  • T. Franck & N. Huyghebaert, 2004. "On the Interactions between Capital Structure and Product Markets.A Survey of the Literature," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business, Review of Business and Economic Literature, vol. 0(4), pages 727-787.
  • Handle: RePEc:ete:revbec:20040407

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    1. Bovenberg, A. Lans & Graafland, Johan J. & de Mooij, Ruud A., 2000. "Tax reform and the Dutch labor market: an applied general equilibrium approach," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 193-214, October.
    2. Donders, Jan & Graafland, Johan, 1998. "CPB models and employment policy in the Netherlands," Economic Modelling, Elsevier, vol. 15(3), pages 341-356, July.
    3. Graafland, J.J. & Huizinga, F.H., 1998. "Taxes and benefits in a non-linear wage equation," MPRA Paper 21076, University Library of Munich, Germany.
    4. Draper, D.A.G., 2000. "Towards an econometric model for the Netherlands : Explaining unemployment," Other publications TiSEM 8d6f0572-d552-4ca2-9df3-6, Tilburg University, School of Economics and Management.
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