Article ID Journal Published Year Pages File Type
5069822 Finance Research Letters 2010 9 Pages PDF
Abstract

Predatory practices have been rationalized by positing some information problem between entrant firms and their financiers. We argue that an effective way to deter product market predation is to obtain credit from an informed source, who can disentangle a firm's expected profitability from its realized profits. Bank finance is often seen as a way of obtaining informed financing. We thus offer a rationale for choosing between bank financing and public debt financing based on its implications for competition in the product market.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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