CONSEQUENCES OF CORPORATE DEBT FINANCING IN PRICE AGREEMENTS' STABILITY

• Authors: Macas Paulo , Serrasqueiro Zélia , Saraiva Paulo
• Languages of publication: EN

Abstracts

EN

The present article aims to show that price agreements are more unstable if their companies use debt as a financing instrument. Moreover, the higher the number of companies (that use debt) in a price agreement, the more instable the price agreement will be. Even when companies compete a la Bertrand and if debt financing is high, the duopoly of price agreement will be instable. When debt financing is present, we found there is a higher number of sub-game perfect equilibrium, in a posteriorly a la Cournot competition, then when debt financing is not present and that this (possible) existence of sub-game perfect equilibrium increases as the debt level of financing increases.

Keywords

EN

DEBT FINANCING; EQUILIBRIUM; PRICE AGREEMENT

Discipline

• ECONOMICS: ECONOMICS

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2005
• Volume: 53
• Issue: 10
• Pages: 1038-1050
• Document type: ARTICLE

Contributors

author

Macas Paulo

author

Serrasqueiro Zélia

author

Saraiva Paulo

• P. Macas, Ústav slovenskej a svetovej ekonomiky SAV, Sancová 56, 811 05 Bratislava 1, Slovak Republic

Identifiers

CEJSH db identifier

06SKAAAA01152661