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Corporate Financing and Product Market Competition: An Overview

Author

Listed:
  • 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. Vittoria Cerasi & Alessandro Fedele & Raffaele Miniaci, 2015. "Do your Rivals Enhance your Access to Credit? Theory and Evidence," BEMPS - Bozen Economics & Management Paper Series BEMPS29, Faculty of Economics and Management at the Free University of Bozen.
    3. Armin Schwienbacher, 2008. "Innovation and Venture Capital Exits," Economic Journal, Royal Economic Society, vol. 118(533), pages 1888-1916, November.
    4. Vu Tuan Chu & Trang Hanh Lam Pham, 2021. "Zero leverage and product market competition," SN Business & Economics, Springer, vol. 1(4), pages 1-18, April.
    5. Armel Jacques, 2022. "Strategic debt in a mixed duopoly: The limited liability effect," TEPP Working Paper 2022-14, TEPP.
    6. Cerasi, Vittoria & Fedele, Alessandro & Miniaci, Raffaele, 2019. "Do rivals enhance your credit conditions?," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 228-243.
    7. Riyanto, Yohanes E. & Schwienbacher, Armin, 2006. "The strategic use of corporate venture financing for securing demand," Journal of Banking & Finance, Elsevier, vol. 30(10), pages 2809-2833, October.
    8. Cestone, Giacinta & Fumagalli, Chiara, 2001. "Internal Capital Markets, Cross-Subsidization and Product Market Competition," CEPR Discussion Papers 2935, C.E.P.R. Discussion Papers.
    9. Vittoria Cerasi & Alessandro Fedele & Raffaele Miniaci, 2017. "Product market competition and access to credit," Small Business Economics, Springer, vol. 49(2), pages 295-318, August.

    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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