Abstract

http://ssrn.com/abstract=1298329
 
 

References (23)



 
 

Citations (4)



 


 



Debt, Investment, and Product Market Competition


Matthew J. Clayton


University of Virginia - McIntire School of Commerce

January 1999

NYU Working Paper No. FIN-99-056

Abstract:     
Recent empirical literature on the interaction between capital structure, investment, and product market decisions suggests that debt leads to lower investment expenditures and weaker product market competition. Theoretical literature in this area has been unable to fully explain this finding (perhaps because all theoretical papers look only at two of the above decisions). This paper develops a model which examines all three decisions and shows that debt and investment can be substitutes in a model where firms rationally take on debt. Furthermore, it is demonstrated that when firms compete with prices in the product market, an increase in debt leads to lower investment and higher prices.

Number of Pages in PDF File: 42

working papers series


Download This Paper

Date posted: November 11, 2008  

Suggested Citation

Clayton, Matthew J., Debt, Investment, and Product Market Competition (January 1999). NYU Working Paper No. FIN-99-056. Available at SSRN: http://ssrn.com/abstract=1298329

Contact Information

Matthew J. Clayton (Contact Author)
University of Virginia (UVA) - McIntire School of Commerce ( email )
P.O. Box 400173
Charlottesville, VA 22904-4173
United States
434-243-4043 (Phone)
434-924-7074 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 387
Downloads: 85
Download Rank: 114,924
References:  23
Citations:  4

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.234 seconds