Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2001-04-04
Number: 01-037/2
Author-Name: Neelam Jain
Author-Workplace-Name: Rice University
Author-Name: Thomas D. Jeitschko
Author-Workplace-Name: Texas A&M University
Author-Name: Leonard J. Mirman
Author-Email: lm8h@cms.mail.virginia.edu
Author-Workplace-Name: University of Virginia
Title: Financial Intermediation and Entry Deterrence
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
File-Url: https://papers.tinbergen.nl/01037.pdf
File-Format: application/pdf
File-Size: 467798 bytes
Handle: RePEc:tin:wpaper:20010037