The paper sets up a theoretical model of banking firms to investigate the relationship between oligopolistic competition and technology structure by using the concept of decentralized operating decisions and centralized investment decisions. It concludes that the representative branch and the new entrant will choose the technology which is deviated from its cost-minimization level if neither of them acts as a quasi-competitive deposit demanders in the case of costless reversibility of capacity decision. In the case of capacity reversed not costlessly, the representative branch will choose the cost-minimizing technology level and the entrant's technology decision depends on its rival's conjectural variation.
Relation:
International Review of Economics & Finance 6(4), pp.421-430
