We contrast equilibria in loan markets with bilateral bank-borrower ties, in which proprietary knowledge of borrowers is not revealed to product market competitors, with equilibria under multilateral financing in which such knowledge may be shared among competing firms. Using each of these two institutional arrangements, we examine the conditions for existence of equilibrium, its ex ante optimality, and borrowing firms’ incentives to engage in privately costly research. Also explored is the potential for lending banks to coordinate post-invention collusion in product markets by multiple investing firms

Proprietary Information, Financial Intermediation, and Research Incentives

CHIESA, GABRIELLA
2004

Abstract

We contrast equilibria in loan markets with bilateral bank-borrower ties, in which proprietary knowledge of borrowers is not revealed to product market competitors, with equilibria under multilateral financing in which such knowledge may be shared among competing firms. Using each of these two institutional arrangements, we examine the conditions for existence of equilibrium, its ex ante optimality, and borrowing firms’ incentives to engage in privately costly research. Also explored is the potential for lending banks to coordinate post-invention collusion in product markets by multiple investing firms
Credit, Intermediation, and the Macroeconomy: Readings and Perspectives in Modern financial Theory
801
830
S. Bhattacharya; Chiesa G.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/11316
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