Product market competition prevents an entrepreneur from extracting the full social surplus from consumers once investment is sunk. Indeed, a project with positive net surplus may generate negative net cash flow. Hence, traditional intermediaries following an NPV rule fail to fund all socially...

We develop a tractable dynamic general equilibrium model of oligopolistic competition with a continuum of heterogeneous industries. Industries are exposed to aggregate and industry-specific productivity shocks. Firms in each industry set value-maximizing state-contingent markups, taking as given...