BETRIEBSWIRTSCHAFTLICHES
FORSCHUNGS-SEMINAR:
Am Fr., 20.3.1998, von 15.30-17.00
haelt im HS 8 des Betriebswirtschaftszentrums der
Universitaet Wien, Bruennerstrasze 72, 1210 Wien,
Dr. Andrea Gaunersdorfer (Uni Wien)
einen Vortrag ueber ihre gemeinsame Arbeit mit Engelbert J. Dockner
und Helmut Elsinger,
''The Strategic Role of Dividends and Debt in Markets With Imperfect
Competition''.
Eine Kopiervorlage der Papers liegt - soweit vorhanden - im
Sekretariat von Prof. Zechner am Betriebswirtschaftszentrum auf.
------------
Abstract:
While many existing models in the literature on financial structure
ignore product market strategies, Brander and Lewis (1986) argue
that there are important linkages between the two. In particular
they show that oligopolistic firms with limited liability follow a
more aggressive output strategy as their leverage increases. In a
follow up paper Glazer (1994) points out that this result crucially
depends on the assumption that debt is short-term. If on the
contrary debt is long-term and rival firms choose their equilibrium
in periods one and two, they have an incentive to be more collusive
in the first period than static oligopolists would be and hence
output decreases. On the basis of this result Glazer concludes that
the degree of price fluctuation in the product market will increase
with the level of the firm's debt. In this paper we argue that the
incentive to collude is driven by limited liability and the dividend
policy of the firm. We find that increasing leverage causes firms
in both periods to increase their output and hence to be more
aggressive. Moreover, we show by means of a numerical example that
the symmetric game admits multiple equilibria some of which cause
firms to choose asymmetric product market strategies. This leads us
to conclude that firms with similar leverage and product market
characteristics might very well choose quite different product
market strategies.
=========================================================================