Economics at your fingertips  

Endogenous Market Structures and Corporate Finance

Federico Etro ()

No 165, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: We characterize the optimal financial structure as a strategic de- vice to optimize the value of a firm competing in a market whose struc- ture is endogenous. Contrary to traditional results based on duopolies and depending on the form of competition, we show the general opti- mality of moderate debt financing whenever positive shocks increase the marginal profitability of strategies that reduce prices, indepen- dently from whether they are strategic susbtitutes or complements. We derive the general formulas for the optimal financial structure un- der Cournot and Bertrand competition with endogenous entry and cost uncertainty and extend the results in many directions.

Keywords: Financial structure; Debt; Modigliani-Miller theorem; Endogenous entry (search for similar items in EconPapers)
JEL-codes: G31 G32 L11 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2009-07, Revised 2009-07
New Economics Papers: this item is included in nep-bec, nep-com and nep-mic
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link) First version, 2009 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in Working Papers from University of Milano-Bicocca, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matteo Pelagatti ().

Page updated 2020-01-18
Handle: RePEc:mib:wpaper:165