We study the dynamics of competition in a model with network effects, an incumbent and entry. We propose a new way of …

failures. In this model, there is no trade-off between bank competition and financial stability … mechanisms for bank risk-taking studied in a large partial equilibrium literature. We show that competitive equilibriums maximize … banks is higher than that of banks enjoying monopoly rents, and is robust to the introduction of social costs of bank …

III rules, thus suggesting a ‘race to the top' in capital standards. We study regulatory competition when banks are … coordinated ones when governments care equally about bank profits, taxpayers, and consumers …

, individuals cannot commit to the use of collateral as a guarantee of repayment, and both lenders and borrowers have incentives to … renege. Our theory provides a micro-foundation to justify the borrowing constraints that are widely used in the existing … macroeconomic models. We provide an explanation to the question of why assets are often used as collateral, rather than simply as a …

states where collateral value is high and maximizes borrowing capacity when it is low. Haircuts increase both with … counterparty risk and asset risk. In equilibrium, lenders choose to re-use collateral. This increases the circulation of the asset … and generates a "collateral multiplier" effect. Finally, we show that intermediation by dealers may endogenously arise in …

provisions. This points to a basic trade-off between the goals of raising competition in technology-intensive markets and the …