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Bouckaert, Jan
Degryse, Hans
Year of Publication: 
Series/Report no.: 
CESifo Working Paper No. 782
We show that competing firms relax overall competition by lowering future barriers to entry. We illustrate our findings in a two-period model with adverse selection where banks strategically commit to disclose borrower information. By doing this, they invite rivals to enter their market. Disclosure of borrower information increases an entrant's second-period profits. This dampens competition for serving the first-period market
barriers to entry
asymmetric information
switching costs
banking competition.
Document Type: 
Working Paper

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