In a theoretical paper, Williams (1995) develops a model of industry equilibrium that incorporates agency costs due to both creditor-shareholder and management-shareholder conflicts.His model has implications for the distribution of firms within an industry in equilibrium.Which of the following statements correctly describes Williams' depiction of industry equilibrium?
A) Each industry has a core of large, profitable, secure, capital-intensive firms, each with at least some external debt, and a competitive fringe of small, marginally profitable or unprofitable, risky, labor-intensive firms.
B) All firms in an industry will ultimately be large, labor-intensive firms with large proportions of debt in their capital structures.
C) All firms in an industry will ultimately be small, capital-intensive firms with no debt.
D) All firms in an industry will ultimately be large, capital-intensive firms with large proportions of debt in their capital structures.
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