The intensity of credit screening in a banking duopoly is endogenized under two different assumptions. In the first case each bank observes its competitior’s investment in information acquisition before making a credit offer. In the second case information acquisition and bidding in the credit...

This paper analyzes the effect of bank participation in the equity of a firm on the competitiveness of the credit market. Using an auction model of bank competition it is shown that an equity stake of one bank is increasing its market power in the market for credits to this firms. The...

With an auction model of bank competition, the relationship between the number of banks in a market, the quality of the firms and the banks’ effort to carry out creditworthiness tests is analyzed. It is shown that, if the cost of information acquisition is taken into account, welfare and the...

The paper analyzes the repeated interaction between a bank and a firm. A simple two period model is constructed, which explains several features of a credit relationship: It shows why bank finance is available for firms which cannot obtain bond financing, why credit contracts contain a .Material...

Using a simple method we show that, in contrast to the case of Bertrand and Cournot competition, better public information about demand reduces the profits of firms playing a R&D cost reduction game. Welfare increases with the precision of public information in the Cournot and cost reduction...