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| Boutin, Xavier; Cestone, Giacinta; Fumagalli, Chiara; Pica, Giovanni; Serrano-Velarde, Nicolas. |
| This paper provides evidence that incumbents' access to group deep pockets has a negative impact on entry in product markets. Relying on a unique French data set on business groups, the paper presents three major findings. First, consistent with theoretical predictions, the amount of financial resources owned by incumbent-affiliated groups has a negative impact on entry in a market. This suggests that internal capital markets operate within corporate groups and that they have a potential anti-competitive effect. Second, the impact on entry of group financial strength is more important in markets where access to external funding is likely to be more difficult. Third, the more active are internal capital markets, the more pronounced the effect on entry of... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Business Groups; Cash Holdings; Internal Capital Markets; Deep-Pockets; Market Entry; Financial Economics; G32; G38; L41. |
| Ano: 2009 |
URL: http://purl.umn.edu/55829 |
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| Fumagalli, Chiara; Motta, Massimo; Ronde, Thomas. |
| This paper studies a model where exclusive dealing (ED) can both promote investment and foreclose a more efficient supplier. While investment promotion is usually regarded as a pro-competitive effect of ED, our paper shows that it may be the very reason why a contract that forecloses a more efficient supplier is signed. Absent the effect on investment, the contract would not be signed and foreclosure would not be a concern. For this reason, considering potential foreclosure and investment promotion in isolation and then summing them up may not be a suitable approach to assess the net effect of ED. The paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defence for ED. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Monopolization Practices; Vertical Agreements; Financial Economics; L12; L40; L42. |
| Ano: 2009 |
URL: http://purl.umn.edu/56213 |
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