Competition in the product market is one of the factors that is effective in determining the composition of companies' financial resources. This factor is considered as a determinant of the cost of debt through its impact on the risk of non-payment of debt. Given the importance of this issue, this study examined the relationship between competitive advantage and financing costs in companies listed on the Tehran Stock Exchange. In order to measure competitive advantage, two components of "product differentiation advantage" and "cost leadership advantage" were used. The statistical sample of this study included 115 companies on the Tehran Stock Exchange in the period 2010-2014. In order to examine the research hypotheses, Eviews software and the generalized least squares (GLS) method were used. The results of the research studies showed that there is a positive and significant relationship between product differentiation advantage and cost leadership advantage as two components of competitive advantage with financing costs. This means that as the level of competitive advantage in companies increases (decreases), financing costs increase (decreases). These findings are consistent with the theory of limited liability in a competitive market, the theory of predation in a competitive market, and the theory of balancing in a competitive market in the capital market. This study can be effective in improving the understanding of owners and other stakeholders of company performance and the market's reward method.