Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/47575
Authors: 
Neff, Cornelia
Year of Publication: 
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: 
Document Type: 
Working Paper

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