The strategic use of debt reconsidered

Marco A. Haan; Linda Toolsema-Veldman

doi:10.1016/j.ijindorg.2006.05.010

The strategic use of debt reconsidered

Marco A. Haan^*
, Linda Toolsema-Veldman

^*Corresponding author for this work

Economics, Econometrics and Finance

Research output: Contribution to journal › Article › Academic › peer-review

13 Citations (Scopus)

Abstract

We consider a two-stage differentiated goods duopoly model with demand uncertainty linking firms' capital structure choice to their output market decisions. Using a numerical analysis, we study how the equilibrium of the model is affected by demand volatility and the substitutability between products. In doing so, we correct a mistake in earlier papers in this literature. Most importantly, we find that the equilibrium debt level decreases as demand becomes more volatile. (C) 2007 Elsevier B.V. All rights reserved.

Original language	English
Pages (from-to)	616-624
Number of pages	9
Journal	International Journal of Industrial Organization
Volume	26
Issue number	2
DOIs	https://doi.org/10.1016/j.ijindorg.2006.05.010
Publication status	Published - Mar-2008
Event	IJIO Symposium on Public/Private Partnerships - , France Duration: 1-Jan-2006 → …

Keywords

capital structure
product market competition
CAPITAL STRUCTURE
FINANCIAL STRUCTURE
EMPIRICAL-ANALYSIS
OLIGOPOLY
INDUSTRY
MARKETS
DUOPOLY

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abstract = "We consider a two-stage differentiated goods duopoly model with demand uncertainty linking firms' capital structure choice to their output market decisions. Using a numerical analysis, we study how the equilibrium of the model is affected by demand volatility and the substitutability between products. In doing so, we correct a mistake in earlier papers in this literature. Most importantly, we find that the equilibrium debt level decreases as demand becomes more volatile. (C) 2007 Elsevier B.V. All rights reserved.",

keywords = "capital structure, product market competition, CAPITAL STRUCTURE, FINANCIAL STRUCTURE, EMPIRICAL-ANALYSIS, OLIGOPOLY, INDUSTRY, MARKETS, DUOPOLY",

author = "Haan, \{Marco A.\} and Linda Toolsema-Veldman",

year = "2008",

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language = "English",

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AU - Haan, Marco A.

AU - Toolsema-Veldman, Linda

PY - 2008/3

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N2 - We consider a two-stage differentiated goods duopoly model with demand uncertainty linking firms' capital structure choice to their output market decisions. Using a numerical analysis, we study how the equilibrium of the model is affected by demand volatility and the substitutability between products. In doing so, we correct a mistake in earlier papers in this literature. Most importantly, we find that the equilibrium debt level decreases as demand becomes more volatile. (C) 2007 Elsevier B.V. All rights reserved.

AB - We consider a two-stage differentiated goods duopoly model with demand uncertainty linking firms' capital structure choice to their output market decisions. Using a numerical analysis, we study how the equilibrium of the model is affected by demand volatility and the substitutability between products. In doing so, we correct a mistake in earlier papers in this literature. Most importantly, we find that the equilibrium debt level decreases as demand becomes more volatile. (C) 2007 Elsevier B.V. All rights reserved.

KW - capital structure

KW - product market competition

KW - CAPITAL STRUCTURE

KW - FINANCIAL STRUCTURE

KW - EMPIRICAL-ANALYSIS

KW - OLIGOPOLY

KW - INDUSTRY

KW - MARKETS

KW - DUOPOLY

U2 - 10.1016/j.ijindorg.2006.05.010

DO - 10.1016/j.ijindorg.2006.05.010

M3 - Article

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SP - 616

EP - 624

JO - International Journal of Industrial Organization

JF - International Journal of Industrial Organization

IS - 2

T2 - IJIO Symposium on Public/Private Partnerships

Y2 - 1 January 2006

ER -

The strategic use of debt reconsidered

Abstract

Keywords

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