Corporate Financing and Product Market Competition: An Overview

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

Giornale degli Economisti, 1999, vol. 58, issue 2, 269-300

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.

Keywords: capital structure; product markets (search for similar items in EconPapers)
JEL-codes: G30 L13 (search for similar items in EconPapers)
Date: 1999
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