  We construct a Nash equilibrium in feedback form for a class of two-person
stochastic games with absorption arising from corporate finance. More
precisely, the paper focusses on a strategic dynamic game in which two
financially-constrained firms operate in the same market. The firms distribute
dividends and are faced with default risk. The strategic interaction arises
from the fact that if one firm defaults, the other one becomes a monopolist and
increases its profitability.
  To determine a Nash equilibrium in feedback form, we develop two different
concepts depending on the initial endowment of each firm. If one firm is richer
than the other one, then we use a notion of control vs.\ strategy equilibrium.
If the two firms have the same initial endowment (hence they are symmetric in
our setup) then we need mixed strategies in order to construct a symmetric
equilibrium.
