The intent and extent of multimarket contact

Abstract

Multimarket research studies the causes and consequences of firms meeting each other in multiple markets, and has found evidence that multimarket contact reduces competitive pressures. Recent work has examined whether multimarket contacts are sought strategically or entered coincidentally, with some papers finding a large role of coincidental entry. The finding is puzzling given the well-documented benefits of multimarket contact. This article takes advantage of advances in multimarket theory and measurement to analyze market entries, and finds that strategic entry is seen when the intent and extent of multimarket contacts are considered, but also that managers appear to be risk-averse when establishing multimarket contacts.

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