A dominant firm’s strategy and its effect on the capital structure of non‐dominant firms in the self‐service discount stores industry

Roberto Santillán Salgado and Abel Hibert Sánchez

MPRA Paper from University Library of Munich, Germany

Abstract: In an industry characterized by oligopolistic market structures there are generally firms that have enough market power as to influence the pricing and output decisions of all participants, forcing others to follow the strategies followed by the dominant firm(s) with very little opportunity to do otherwise. When a dominant firm is part of a larger corporation, which gives it the financial capacity to support an above‐average, long‐term investment, as a logical reaction to protect (or minimize the loss of market share), the rest of the participants in the industry are expected to also make an attempt to increase their investments, fundamentally affecting the long‐term capital structure strategy. This work’s contribution consists on presenting an empirical analysis of the capital structure decisions of the non‐dominant firms in the Self‐Service Discount Stores Industry (SSDSI) that result from the rapid expansion of Wal‐Mart in the Mexican market.

Keywords: oligopolistic; business strategy; capital structure (search for similar items in EconPapers)
JEL-codes: G00 G10 G15 G30 (search for similar items in EconPapers)
Date: 2009
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