This paper extends a model by Brander and Lewis [Brander, J., Lewis, T., 1986. Oligopoly and financial structure: The limited liability effect. American Economic Review 76, 956-970] on the relationship between capital structure, investment and product market competition based on the limited...

This paper examines the effect of corporate equity ownership on investment when firms have product market relationships. Firms have incentives to hold long equity positions when their products are complements. These equity positions induce the firms to increase their real investment...

We analyze a two period setting where firms first choose equity positions in each other and second engage in operating activities that cause externalities. Firms facing positive externalities optimally choose long equity positions to increase their profits. Firms facing negative externalities...