Softening Competition by Enhancing Entry: An Example from the Banking Industry

Jan Bouckaert and Hans Degryse

No 782, CESifo Working Paper Series from CESifo

Abstract: We show that competing firms relax overall competition by lowering future barriers to entry. We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclose borrower information. By doing this, they invite rivals to enter their market. Disclosure of borrower information increases an entrant’s second-period profits. This dampens competition for serving the first-period market

Keywords: barriers to entry; asymmetric information; switching costs; banking competition. (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (1)

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Working Paper: Softening Competition by Enhancing Entry: An Example from the Banking Industry (2002)
Working Paper: Softening Competition by Enhancing entry: An Example from the Banking Industry (2002)
Working Paper: Softening Competition by Enhancing entry: An Example from the Banking Industry (2002)
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