Softening competition by enhancing entry : an example from the banking industry

Jan Bouckaert; Hans Degryse

We show that competing firms relax overall competition by lowering future barriers to entry. We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclose borrower information. By doing this, they invite rivals to enter their market. Disclosure of borrower information increases an entrant's second-period profits. This dampens competition for serving the first-period market.

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Year of publication:	2002
Authors:	Bouckaert, Jan ; Degryse, Hans
Publisher:	Munich : Univ., Center for Economic Studies [u.a.]
Subject:	Bank \| Wettbewerb \| Competition \| Markteintritt \| Market entry \| Adverse Selektion \| Adverse selection \| Asymmetrische Information \| Asymmetric information \| Theorie \| Theory

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Extent:	29 S
Series:	CESifo working papers : the international platform of Ludwig-Maximilians University's Center for Economic Studies and the Ifo Institute. - Munich : CESifo, ISSN 1617-9595, ZDB-ID 2023380-2. - Vol. 782
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Notes:	Internetausg.: http://www.cesifo.de/pls/ifo_app/DocLinkCESifoDl?getDoc=cesifo_wp782.pdf Literaturverz. S. 27 - 29
Classification:	D43 - Oligopoly and Other Forms of Market Imperfection ; L13 - Oligopoly and Other Imperfect Markets ; G21 - Banks; Other Depository Institutions; Mortgages
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10001708609