Abstract
The paper considers an industry featuring agency problems between outside investors and entrepreneurs who manage the firms comprising the industry. In a range of circumstances, industry scale is independent of product market structure, and is determined solely by the amount of equity financing contributed by the entrepreneurs, and by the capital market’s response to possible managerial malfeasance. Thus, in the face of capital market constraints, a change in productmarket concentration has no effect on market performance unless it occasions a change in the amount of inside equity financing.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.