This paper shows that obligations from debt hinder tacit collusion if equity owners are protected by limited liability. In contrast to its advantageous commitment value in short-run competition, leverage reduces profits from infinite interaction. Contrasting uncorrelated shocks with a cyclical...

Die Finanzstruktur eines Unternehmens beeinflußt dessen Wettbewerbs verhalten auf dem Gütermarkt. Dieser Sachverhalt wird im Rahmen von industrieökonomischen Oligopolmodellen aufgezeigt, in denen die Aufnahme von Fremdkapital eine strategische Verpflichtung der Unternehmen für eine bestimmte...

This paper presents a micro-econometric model testing for changes in firms' product and pricing decisions in two American industries where leading companies have sharply increased their financial leverage. According to the latest econometric theory, the empirical analysis is carried out through...

The paper proposes a theory of the anti-competitive effects of debt finance based on the interaction between capital structure, managerial incentives, and firms' ability to sustain collusive agreements. It shows that shareholders' commitments that reduce conflicts with debtholders such as hiring...

This paper shows that obligations from debt hinder tacit collusion if equity owners are protected by limited liability. In contrast to its advantageous commitment value in short-run competition, leverage reduces profits from infinite interaction. Contrasting uncorrelated shocks with a cyclical...

This paper empirically investigates the effect of leverage on strategic preemption. Using new data on entry plans and incumbent investments from the American casino industry, I find that high leverage prevents incumbents from responding to entry threats. Facing the same set of entry plans, low...

This paper studies strategic behavior in product markets with asymmetric information. A real options model is developed to investigate information revelation and signaling role capital structure. Information revelation is ensured through a learning mechanism that stems from the real options...

We show how product market competition affects capital structure by developing a tractable model that embeds the tradeoff between the tax benefits and bankruptcy costs of debt in an industry equilibrium setting with heterogeneous, imperfectly competitive firms. Different determinants of...

Capital structure and financial policies can raise anticompetitive concerns to the extent that they induce rival firms to compete less aggressively. In contrast to common ownership, anticompetitive concerns triggered by financial leverage being ratcheted up in parallel across rival firms can be...

A firm's leverage increases its bargaining power and reduces suppliers' relation-specific investment, and so does competition among suppliers. We explore the interaction between leverage and supplier competition, and find that firm leverage decreases with the degree of competition among...