Preemption, Start-Up Decisions and the Firms' Capital Structure
19 Pages Posted: 14 Jun 2007
Date Written: May 2007
In this article, we analyse the interactions between financial and start-up decisions in an oligopolistic framework, where firms compete to enter a new market. We show that preemption can substantially reduce the negative effects of credit rationing on start-up investment decisions.
Keywords: capital structure, irreversibility, preemption, real options
JEL Classification: D92, G33
Suggested Citation: Suggested Citation