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Financial intermediation and entry-deterrence

Author

Listed:
  • Neelam Jain
  • Thomas D. Jeitschko
  • Leonard J. Mirman

Abstract

In this paper, we analyze the interaction between an incumbent firm's financial contract with abank 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; thelow-cost incumbent repays more to the bank in the first period, due to the threat of entry; andthere are parameter values for which the bank makes more profits with the threat of entry thanwithout.
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Suggested Citation

  • Neelam Jain & Thomas D. Jeitschko & Leonard J. Mirman, 2003. "Financial intermediation and entry-deterrence," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(4), pages 793-815, November.
    • Handle: RePEc:spr:joecth:v:22:y:2003:i:4:p:793-815
    DOI: 10.1007/s00199-002-0351-2
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    References listed on IDEAS

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    Cited by:

    1. Argenton, Cedric & Willems, Bert, 2015. "Exclusion through speculation," Other publications TiSEM 1b61bc7a-ce15-4b4c-84e6-b, Tilburg University, School of Economics and Management.
    2. Jain, Neelam, 2011. "Entry deterrence and experimentation under demand uncertainty," International Journal of Industrial Organization, Elsevier, vol. 29(4), pages 464-472, July.
    3. Abdullahi O. Abdulkadri, 2014. "Impact Of Deregulation Of The Jamaica Mobile Phone Market On Calling Rates," American Journal of Economics and Business Administration, Science Publications, vol. 6(2), pages 81-88, August.
    4. Argenton, Cédric & Willems, Bert, 2015. "Exclusion through speculation," International Journal of Industrial Organization, Elsevier, vol. 39(C), pages 1-9.
    5. Leonard J. Mirman & Thomas Jeitschko & Neelam Jain, 2001. "Financial Intermediation and Entry-Deterrence: A survey," Economics Bulletin, AccessEcon, vol. 12(1), pages 1-13.

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