How do financial constraints influence innovative activities of firms? In a two-period model of price competition with differentiated products we first analyze the incentives to innovate when both firms are self-financed. We then assume that one of the firms is financially constrained and...

How do financial constraints influence innovative activities of firms? In a two-period model of price competition with differentiated products we first analyze the incentives to innovate when both firms are self-financed. We then assume that one of the firms is financially constrained and...

1 Introduction -- 2 Financial structure and strategic competition -- 3 Credit financing and strategic competition -- 4 Venture capital financing and strategic competition -- 5 Conclusion -- References -- Figures -- Tables -- List of symbols.