Double Marginalization Because of External Financing: Capacity Investment Under Uncertainty

References

• Anand K, Anupindi R, Bassok Y (2008) Strategic inventories in vertical contracts. Management Sci. 54(10):1792–1804.Link, Google Scholar
• Bar-Ilan A, Strange WC (1999) The timing and intensity of investment. J. Macroeconomics 21(1):57–77.Crossref, Google Scholar
• Behrens V, Berger M, Hud M, Húnermund P, Iferd Y, Peters B, Rammer C, Schubert T (2017) Innovation activities of firms in Germany—Results of the German CIS 2012 and 2014. Technical Report No. 17-04, ZEW, Leibniz Centre for European Economic Research, Mannheim, Germany.Google Scholar
• Bolton P, Wang N, Yang J (2019) Investment under uncertainty with financial constraints. J. Econom. Theory 184:104912.Crossref, Google Scholar
• Boyle GW, Guthrie GA (2003) Investment, uncertainty, and liquidity. J. Finance 58(5):2143–2166.Crossref, Google Scholar
• Chandy RK, Tellis GJ (2000) The incumbent’s curse? Incumbency, size, and radical product innovation. J. Marketing 64(3):1–17.Crossref, Google Scholar
• Che YK, Sákovics J (2008) Hold-up problem. Durlauf SN, Blume LE, eds. The New Palgrave Dictionary of Economics (Palgrave Macmillan, Basingstok, UK), 2778–2782.Crossref, Google Scholar
• Dangl T (1999) Investment and capacity choice under uncertain demand. Eur. J. Oper. Res. 117(3):415–428.Crossref, Google Scholar
• Davis J, Morse A, Wang X (2020) The leveraging of silicon valley. NBER Working Paper No. 27591, National Bureau of Economic Research, Cambridge, MA.Google Scholar
• de la Torre A, Martínez Pería MS, Schmukler SL (2010) Bank involvement with SMEs: Beyond relationship lending. J. Banking Finance 34(9):2280–2293.Crossref, Google Scholar
• de Villemeur EB, Ruble R, Versaevel B (2014) Investment timing and vertical relationships. Internat. J. Indust. Organ. 33:110–123.Crossref, Google Scholar
• Desai PS, Koenigsberg O, Purohit D (2010) Forward buying by retailers. J. Marketing Res. 47(1):90–102.Crossref, Google Scholar
• Dixit AK, Pindyck RS (1994) Investment Under Uncertainty (Princeton University Press, Princeton, NJ).Crossref, Google Scholar
• Doraszelski U, Gomes JF, Nockher F (2022) Oligopoly dynamics with financial frictions. Preprint, submitted November 19, http://dx.doi.org/10.2139/ssrn.4281892.Google Scholar
• El Ouardighi F, Sim JE, Kim B (2016) Pollution accumulation and abatement policy in a supply chain. Eur. J. Oper. Res. 248(3):982–996.Crossref, Google Scholar
• Giraudo E, Giudici G, Grilli L (2019) Entrepreneurship policy and the financing of young innovative companies: Evidence from the Italian startup act. Res. Policy 48(9):103801.Crossref, Google Scholar
• Gozzi F, Russo F (2006) Verification theorems for stochastic optimal control problems via a time dependent Fukushima–Dirichlet decomposition. Stochastic Processes Their Appl. 116(11):1530–1562.Crossref, Google Scholar
• Hale G, Santos JA (2009) Do banks price their informational monopoly? J. Financial Econom. 93(2):185–206.Crossref, Google Scholar
• Hall BH (2002) The financing of research and development. Oxford Rev. Econom. Policy 18(1):35–51.Crossref, Google Scholar
• Hennessy CA, Whited TM (2005) Debt dynamics. J. Finance 60(3):1129–1165.Crossref, Google Scholar
• Hochberg YV, Serrano CJ, Ziedonis RH (2018) Patent collateral, investor commitment, and the market for venture lending. J. Financial Econom. 130(1):74–94.Crossref, Google Scholar
• Hubbard RG (1994) Investment under uncertainty: Keeping one’s options open. J. Econom. Literature 32(4):1816–1831.Google Scholar
• Huberts NFD, Dawid H, Huisman KJM, Kort PM (2019) Entry deterrence by timing rather than overinvestment in a strategic real options framework. Eur. J. Oper. Res. 274(1):165–185.Crossref, Google Scholar
• Huisman KJM, Kort PM (2015) Strategic capacity investment under uncertainty. RAND J. Econom. 46(2):376–408.Crossref, Google Scholar
• Kortum S, Lerner J (2000) Assessing the contribution of venture capital. RAND J. Econom. 31(4):674–692.Crossref, Google Scholar
• Kumar P, Langberg N, Zvilichovsky D (2020) Crowdfunding, financing constraints, and real effects. Management Sci. 66(8):3561–3580.Link, Google Scholar
• Leland HE (1994) Corporate debt value, bond covenants, and optimal capital structure. J. Finance 49(4):1213–1252.Crossref, Google Scholar
• Lin D (2023) Accelerability vs. scalability: R&D investment under financial constraints and competition. Management Sci. 69(7):4078–4107.Link, Google Scholar
• Linnemer L (2022) Doubling back on double marginalization. Rev. Indust. Organ. 61:1–19.Crossref, Google Scholar
• Lukas E, Thiergart S (2019) The interaction of debt financing, cash grants and the optimal investment policy under uncertainty. Eur. J. Oper. Res. 276(1):284–299.Crossref, Google Scholar
• Lyandres E, Zhdanov A (2010) Accelerated investment effect of risky debt. J. Banking Finance 34(11):2587–2599.Crossref, Google Scholar
• Mauer DC, Sarkar S (2005) Real options, agency conflicts, and optimal capital structure. J. Banking Finance 29(6):1405–1428.Crossref, Google Scholar
• Mello AS, Parsons JE (1992) Measuring the agency cost of debt. J. Finance 47(5):1887–1904.Crossref, Google Scholar
• Miao J (2005) Optimal capital structure and industry dynamics. J. Finance 60(6):2621–2659.Crossref, Google Scholar
• Minniti M (2008) The role of government policy on entrepreneurial activity: Productive, unproductive, or destructive? Entrepreneurship Theory Practice 32(5):779–790.Crossref, Google Scholar
• Nishihara M, Shibata T (2021) The effects of asset liquidity on dynamic sell-out and bankruptcy decisions. Eur. J. Oper. Res. 288(3):1017–1035.Crossref, Google Scholar
• OECD/EC (2014) Policy brief on access to business start-up finance for inclusive entrepreneurship–entrepreneurial activities in Europe. Technical report, Publications Office of the European Union, Luxembourg City, Luxembourg.Google Scholar
• Pawlina G (2010) Underinvestment, capital structure and strategic debt restructuring. J. Corporate Finance 16(5):679–702.Crossref, Google Scholar
• Pennings E (2017) Real options with ex-post division of the surplus. J. Banking Finance 81:200–206.Crossref, Google Scholar
• Petersen MA, Rajan RG (1995) The effect of credit market competition on lending relationships. Quart. J. Econom. 110(2):407–443.Crossref, Google Scholar
• Pindyck RS (1988) Irreversible investment, capacity choice, and the value of the firm. Amer. Econom. Rev. 78(5):969–985.Google Scholar
• Qu Z, Raff H (2021) Vertical contracts in a supply chain and the bullwhip effect. Management Sci. 67(6):3744–3756.Link, Google Scholar
• Rajan RG (1992) Insiders and outsiders: The choice between informed and arm’s-length debt. J. Finance 47(4):1367–1400.Crossref, Google Scholar
• Ritchken P, Wu Q (2021) Capacity investment, production flexibility, and capital structure. Production Oper. Management 30(12):4593–4613.Crossref, Google Scholar
• Robb AM, Robinson D (2014) The capital structure decisions of new firms. Rev. Financial Stud. 27(1):153–179.Crossref, Google Scholar
• Roy A, Gilbert SM, Lai G (2019) The implications of visibility on the use of strategic inventory in a supply chain. Management Sci. 65(4):1752–1767.Link, Google Scholar
• Ryan RM, O’Toole CM, McCann F (2014) Does bank market power affect SME financing constraints? J. Banking Finance 49:495–505.Crossref, Google Scholar
• Santos JA, Winton A (2008) Bank loans, bonds, and information monopolies across the business cycle. J. Finance 63(3):1315–1359.Crossref, Google Scholar
• Sarkar S (2011) Optimal size, optimal timing and optimal financing of an investment. J. Macroeconomics 33(4):681–689.Crossref, Google Scholar
• Schenone C (2009) Lending relationships and information rents: Do banks exploit their information advantages? Rev. Financial Stud. 23(3):1149–1199.Crossref, Google Scholar
• Schwert M (2020) Does borrowing from banks cost more than borrowing from the market? J. Finance 75(2):905–947.Crossref, Google Scholar
• Sethi SP, Taksar MI (2002) Optimal financing of a corporation subject to random returns. Math. Finance 12(2):155–172.Crossref, Google Scholar
• Spengler JJ (1950) Vertical integration and antitrust policy. J. Political Econom. 58(4):347–352.Crossref, Google Scholar
• Sundaresan S, Wang N (2007) Investment under uncertainty with strategic debt service. Amer. Econom. Rev. 97(2):256–261.Crossref, Google Scholar
• Tirole J (1988) The Theory of Industrial Organization (MIT Press, Cambridge, MA).Google Scholar
• Trigeorgis L (1996) Real Options: Managerial Flexibility and Strategy in Resource Allocation (MIT Press, Cambridge, MA).Google Scholar
• Willems B, Zwart G (2018) Optimal regulation of network expansion. RAND J. Econom. 49(1):23–42.Crossref, Google Scholar
• Wong TY, Yu J (2022) Credit default swaps and debt overhang. Management Sci. 68(3):2069–2097.Link, Google Scholar
• Zormpas D (2020) Investments under vertical relations and agency conflicts: A real options approach. Internat. Rev. Econom. Finance 70:273–287.Crossref, Google Scholar
• Zormpas D, Agliardi R (2021) The effect of vertical relationships on investment timing. Internat. Game Theory Rev. 23(03):2150005.Crossref, Google Scholar
• Zubair S, Kabir R, Huang X (2020) Does the financial crisis change the effect of financing on investment? Evidence from private SMEs. J. Bus. Res. 110:456–463.Crossref, Google Scholar