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Corporate Financing and Product Market Competition: An Overview

Author

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  • Giacinta Cestone

    () (GREMAQ, University of Toulouse and Institut d'Analisi Economica (CSIC), Barcelona)

Abstract

This paper offers an overview of the main interactions between corporate financing decisions and product market competition. Firms’ financial policy may affect the market game in several ways. It can make a firm more or less vulnerable to predation, commit the firm to a particular market strategy, or convey signals to the firm’s competitors. Financial policy matters also in that the decision to resort to a common lender can facilitate collusion among competing firms. Finally, an appropriate design of financial claims can commit the lender not to provide potential entrants with funding or expertise.

Suggested Citation

  • Giacinta Cestone, 1999. "Corporate Financing and Product Market Competition: An Overview," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(2), pages 269-300, September.
  • Handle: RePEc:gde:journl:gde_v58_n2_p269-300
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    Citations

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    Cited by:

    1. Valta, Philip, 2012. "Competition and the cost of debt," Journal of Financial Economics, Elsevier, vol. 105(3), pages 661-682.
    2. Cestone, Giacinta & Fumagalli, Chiara, 2001. "Internal Capital Markets, Cross-Subsidization and Product Market Competition," CEPR Discussion Papers 2935, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    capital structure; product markets;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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