Financial Intermediation and Entry Deterrence

Neelam Jain (), Thomas Jeitschko and Leonard Mirman

No 01-037/2, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In this paper, we analyze the interaction between an incumbent firm's financial contract with abank and its product market decisions in the face of the threat of entry, in a dynamic model.The main results of the paper are: there exists a separating equilibrium with no limit pricing; thelow-cost incumbent repays more to the bank in the first period, due to the threat of entry; andthere are parameter values for which the bank makes more profits with the threat of entry thanwithout.

Keywords: Entry; Intermediation; Limit Pricing; Banking; information (search for similar items in EconPapers)
Date: 2001-04-04
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Journal Article: Financial intermediation and entry-deterrence (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20010037

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