Capital Structure and Imperfect Competition in Product Markets (Revised: 20-85 and 11-87)
In this paper a theory of capital structure based on imperfections in firms' product markets is illustrated with numerical examples. In the model used there is a corporate tax advantage to debt but there are no direct bankruptcy costs. The effect of bankruptcy rather is to delay investment decisions. Although these delays are not in themselves costly, they can put the bankrupt fit at a strategic disadvantage and can result in the firm being forced to liquidate. In order to prevent this happening it is optimal for firms to use a sufficient amount of equity in their capital structure to prevent bankruptcy.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (215) 898-7616
Fax: (215) 573-8084
Web page: http://finance.wharton.upenn.edu/~rlwctr/Email:
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:fth:pennfi:24-84. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel)
If references are entirely missing, you can add them using this form.