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Title:Financing and product market competition: Optimal contracts with venture capitalists PDF Logo
Authors:Neff, Cornelia
Issue Date:2000
Series/Report no.:Tübinger Diskussionsbeiträge 162
Abstract:We consider the provision of venture capital in a dynamic agency model. In particular, we focus on the interaction between venture capital financing and product market competition: A young firm with a risky innovation project attempts to enter a market where it faces two periods of price competition with an incumbent firm. Since the young firm is wealth-constrained, it seeks equity financing from a venture capital company. The allocation of funds and learning about the project's quality are both subject to moral hazard. We analyze the provision of capital under (i) short-term and (ii) long-term contracting, and compare the results.
Subjects:Venture Capital
Dynamic Financial Contract
Moral Hazard and Learning
Innovation and Market Entry
Strategic Competition
JEL:G32
L13
O31
Persistent Identifier of the first edition:urn:nbn:de:bsz:21-opus-21175
Document Type:Working Paper
Appears in Collections:Tübinger Diskussionsbeiträge, Universität Tübingen

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