We develop a model of banking competition for deposits based on modern financial intermediation theory and industrial organization analysis. The standard demand deposit contract makes banks vulnerable to failure and introduces (endogenous) expectations-based vertical differentiation. A...

Brand proliferation is examined as an instrument of competition among established firms and as a means to limit entry in a model with both firm and product-specific differentiation. We find that the incentives to proliferate, the credibility of proliferation as an entry barrier, and the welfare...

We study the welfare implications of market power in a model where banks choose between credit rationing and monitoring in order to alleviate an underlying moral-hazard problem. We show that the effect of banks’ market power on social welfare is the result of two countervailing effects. On the...