The performance effects of unintended and purposive multimarket contact

Abstract

AbstractMultimarket contact may arise from unintended encounters among competitors pursuing uncoordinated market expansion strategies, as well as from the strategic intent of firms seeking mutual forbearance with their rivals. Are the performance effects of unintended multimarket contacts different from those of purposeful contacts? Results in the US airline industry indicate that they are not. Multimarket contacts have a constant marginal effect on margins regardless of whether they occur at a level below or above the level that would be expected just by chance. In this case, the performance effect of multimarket contact is determined by the realized strategy, regardless of whether it was deliberate or emergent. Implications for other areas of strategy research are discussed. Copyright © 2002 John Wiley & Sons, Ltd.