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Corporate Financing and Product Market Competition: An Overview

  • Giacinta Cestone

    ()

    (GREMAQ, Université de Toulouse and Università Cattolica di Milano)

This paper offers an overview of the main interactions between corporate financing decisions and product market competition. 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.

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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 18.

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Date of creation: 01 Apr 1999
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Publication status: Published in Giornale degli Economisti e Annali di Economia, 1999, vol. 58, pages 269-300
Handle: RePEc:sef:csefwp:18
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