Abstract
In this chapter I analyze a simple two-period model of innovation with a financially constrained firm that is dependent on outside funding. It therefore writes a contract with an outside investor. The basic structure of the model is similar to Bolton and Scharfstein [1990]. I assume the same informational structure between the contracting parties (i.e. profits are not verifiable to courts), but depart from their analysis in two decisive directions.
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© 1996 Physica-Verlag Heidelberg
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Maurer, B. (1996). Innovation under Financial Constraints and Competition. In: R & D, Innovation and Industrial Structure. Contributions to Economics. Physica-Verlag HD. https://doi.org/10.1007/978-3-642-95925-7_5
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DOI: https://doi.org/10.1007/978-3-642-95925-7_5
Publisher Name: Physica-Verlag HD
Print ISBN: 978-3-7908-0900-8
Online ISBN: 978-3-642-95925-7
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