In this paper, we analyze the interaction between an incumbent rm's nancial contract with a bank 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; the low-cost incumbent repays more to the bank in the rst period, due to the threat of entry; and there are paramet...

HERE WAS A HAPPY TIME, not too long ago, when the major dialogue on national arms policy was between the armers and the disarmers. -~The issue, at least in much of the public’s mind, was whether the nation ought to pursue a policy of negotiated comprehensive disarmament or one of national preparedness. There were those who believed that all arms races must eventuate in war, and those who believ...

We consider a setting in which two potential buyers, one with a prior toehold and one without, compete in a takeover modeled as an ascending auction with participating costs. The toeholder is more aggressive during the takeover process because she is also a seller of her own shares. The non-toeholder anticipates this extra-aggressiveness of the toeholder. Thus, he is deterred from participating...