Product Market Competition and Optimal Debt Contracts: The Limited Liability E®ect Revisited
نویسنده
چکیده
This paper shows that asymmetric information between lenders and borrowers plays a crucial role in the existence of interactions between ̄nancial decisions and output market strategies. Lenders o®er an optimal, renegotiation-proof ̄nancial contract which resembles a standard debt contract. Computing Cournot equilibria, debt causes ̄rms to compete less aggressively: the usual (positive) limited liability e®ect on quantities is o®set by a negative one due to (endogenous) ̄nancial costs.
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تاریخ انتشار 1999