Managers, debt and industry equilibrium

Erlend Nier

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper reconsiders the strategic effect of debt under the assumption that quantity choices are made by managers whose objective is to avoid bankruptcy. The basic result is that quantity choices, which are strategic substitutes under profit maximization, may turn into strategic complements under reasonable assumptions on the profit function. The value of delegation, optimal wage contracts, and empirical implications are discussed.

JEL-codes: D21 G32 L13 (search for similar items in EconPapers)
Pages: 53 pages
Date: 1998-04-01
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Citations: View citations in EconPapers (1)

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