Study of Relationship between Debt, Investment and Output Market Competition Based on Bankruptcy Costs

Drawing on Brander and Lewis' train of thought in reaserch, we provide a new model concerning the impact of bankruptcy-cost-based liability on investment in the Cournot oligopolistic competitive environment. We have found out that in Cournot oligopolistic competition environment, the impact of debt on investment depends on the type of product competition strategy and influence of environmental changes on the marginal returns and cross marginal returns of the firm's output and investment respectively.