Finance and Competition.

Fernandes, Ana; Dellas, Harris (2014). Finance and Competition. The Economic Journal, 124(575), pp. 269-288. Wiley 10.1111/ecoj.12055

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We investigate the role of financial constraints for product market competition in a general equilibrium model, where firms may differ in terms of own wealth and/or efficiency. We find that, in general, the amelioration of financial constraints increases competition (it lowers the Lerner index of markups) in financially dependent sectors even when other standard concentration indexes indicate otherwise. Our analysis implies that disruptions in financial markets – such as the recent financial crisis – may have adverse effects on competition in product markets, a cost that has not been identified before.

Item Type:	Journal Article (Original Article)
Division/Institute:	Business School
Name:	Fernandes, Ana and Dellas, Harris
Publisher:	Wiley
Language:	English
Submitter:	Service Account
Date Deposited:	04 Sep 2019 10:19
Last Modified:	04 Sep 2019 10:22
Publisher DOI:	10.1111/ecoj.12055
ARBOR DOI:	10.24451/arbor.5673
URI:	https://arbor.bfh.ch/id/eprint/5673