Effect Of Multimarket Contact Research Articles

The Effect of Multimarket Contact on Patent Litigation: Evidence from the Mobile Phone Industry

The Effect of Multimarket Contact on Patent Litigation: Evidence from the Mobile Phone Industry

Maneuvering multimarket competition: The effects of multimarket contact and strategic alliances on performance of single-market firms

Research on multimarket competition has focused on how multimarket contact shapes competitive behavior of firms that face each other in multiple markets. To date, there has been little attention to how multimarket contact affects single-market firms nor how single-market firms cope with multimarket competition. In this study, we examine the effects of multimarket competition and strategic alliances on single-market firms’ market share. Our analysis shows that the degree of multimarket contact firms had outside of a single-market firm’s market negatively affected the single-market firm’s market share. Yet, the number of strategic alliances a single-market firm had and having alliances with multimarket firms helped the single-market firm to cope with competitive pressure derived from multimarket contact and enhance its market share.

The Competitive Effect of Multi Market Contact

The Competitive Effect of Multi Market Contact

Effects of Multimarket Contact on the Governance of R&D Alliances

We investigate how competitive relationships between R&D alliance partners in high-technology industries affect their alliance governance choices. The alliance literature has interpreted direct com...

“Exports‐at‐Risk”: The Effect of Multimarket Contact in International Trade

Despite a well‐established literature examining possible impacts on competition in oligopolistic markets from multimarket contact (MMC) among diversified firms, only recently have trade theorists considered the possible effects of MMC among exporters in limiting the anticipated procompetitive role of imports. This article presents a first effort to test the empirical importance of a measure of this MMC, called “exports‐at‐risk,” on import prices (unit‐values). Suggestive evidence of anticompetitive impacts of MMC among exporters is obtained for highly traded four‐digit harmonized system (HS) products within the broad category of “fats and oils.” Exporters in fats and oils seem to price higher in markets where they meet rivals with the ability to retaliate against their “exports at risk.”

“Exports-at-Risk”: The Effect of Multimarket Contact in International Trade

“Exports-at-Risk”: The Effect of Multimarket Contact in International Trade

Birds of a feather? Asymmetric multimarket rivalry between Multinational and Local firms

This study seeks to analyze the joint effect of multimarket contact and firm nationality on the likelihood of market exit for pharmaceutical companies. Past research on the relation between multimarket contact and exit has established that multimarket contact leads to mutual forbearance, which reduces the likelihood of exit. I propose to examine the same link between MMC and exit with two extensions: first, explaining role of inter-firm coordination resulting in a U- shaped relationship between multimarket contact and exit; and second, the differences in exit likelihood between MNCs and domestic firms at similar levels of multimarket contact. Using cardiovascular drug sale data for 179 firms in 200 pharmaceutical molecules in India for the period of 2008-2011, this study shows that multimarket contact has a U-shaped relation with exit likelihood, and this relation is more prominent for multinational firms.

Effects of multimarket contact on airlines' pricing behaviors: Empirical evidences and future perspective

Effects of multimarket contact on airlines' pricing behaviors: Empirical evidences and future perspective

Multimarket contact and firm performance: The moderating effect of Confucian culture

This paper examines the effect of Confucian cultural value on the relationship between multimarket contact and two dimensions of firm performance, i.e., firms’ innovation and profitability. It is hypothesized that firms with a high level of multimarket contact are more likely to show mutual forbearance towards their competitors, which in turn influences their innovative behavior and financial performance. Taking into account the possible moderating effects of Confucian cultural value, we also hypothesize that the effect of multimarket contact is more pronounced among firms from the Confucian culture. In other words, it is argued that firms from the Confucian culture are more likely to innovate and obtain better financial performance. Empirical tests were conducted after the hypotheses, and the findings support the arguments on multimarket contacts and mutual forbearance hypotheses. Through facilitating tacit collusion, multimarket contact does seem to help create superior economic performance.

Geographical and Multi-Product Linkages of Markets: Impact on Firm Equilibrium Interactions (Some Evidence from the European Car Market)

This paper aims to study geographical and multi-product linkages of markets (multiple market presence) and firm behaviour interdependence as a result of such linkages existence. In particular, it attempts to answer whether the multimarket linkages lead to more cooperative behaviour among the firms, which results in higher prices and profits, and whether the degree of collusive/cooperative behaviour varies across markets. These issues are investigated within a structural oligopoly model for differentiated products for the European automobile market on the basis of the aggregate product-level data for 1970-1999. The results of the study reveal weak (quantitative) effect of multimarket contact on market conduct/pricing in the European car market as well as provide some evidence on the redistribution of the market power from the more collusive to the more competitive markets due to multimarket contact.

Measuring the Effect of Multimarket Contact on Competition: Evidence from Mergers Following Radio Broadcast Ownership Deregulation

Abstract This paper examines the effects of multimarket contact on advertising prices in the U.S. radio broadcasting industry. While it is in general difficult to measure the effect of multimarket contact on competition, the 1996 Telecommunications Act substantially relaxed local radio ownership restrictions, giving rise to a major and exogenous consolidation wave. Between the years of 1995 to 1998, the average extent of multimarket contact in major U.S. media markets increased by 2.5 times. Importantly, the extent of change in multimarket contact varies across markets, and the change in multimarket contact varies separately from the change in concentration. Using a panel data set on 248 geographic U.S. radio broadcast markets, 1995-1998, we find that multimarket contact has little effect on advertising prices. This paper contributes to the empirical literature on multimarket contact by analyzing a different industrial context and using longitudinal data surrounding an ownership deregulation.

Bringing Managers into Theories of Multimarket Competition: CEOs and the Determinants of Market Entry

Multimarket (or multipoint) contact has been shown to deter aggressive actions by rivals toward each other, producing a situation of mutual forbearance among firms. To create this deterrent capability, however, firms must enter each others' markets, which is just the kind of action that the deterrent is supposed to limit. This study explores the questions: Under what conditions are firms likely to behave aggressively toward their multimarket rivals by entering their markets and when will they engage in mutual forbearance? We describe how the effect of multimarket contact on the market-entry moves of a firm changes as the level of contact a firm has with its rivals increases. We draw on competitive intelligence and decision-making theory to argue that the competitive advantages associated with multimarket contact are supplemented by the fact that a firm's multimarket competitors serve as a readily available model to reduce the uncertainty associated with market-entry decisions. We hypothesize that these factors lead firms to prefer, up to the point where forbearance concerns become paramount, to enter the markets in which their multipoint rivals already compete. We also argue that once multimarket contact levels reach the point where forbearance begins to operate, these levels also serve to stabilize the structure through better competitive intelligence, with the result that the propensity of a firm to enter into additional markets of its multimarket rivals declines. We then extend multimarket theory by focusing on the role of the CEO. Specifically, we argue that newer and longer-tenured CEOs are likely to face different influences on their preferences for particular competitive actions. We test hypotheses that link the likelihood that CEOs will abide by the mutual interdependencies that their firm's multimarket ties represent to their tenure in the CEO position. Our findings produce support for an inverted-U-shaped relationship between multipoint contact and market entry. We also find evidence that longer-tenured CEOs are guided by their firm's multimarket relationships. Newer CEOs, however, do not seem to adopt a forbearance approach toward their firm's multimarket competitors. Our findings have important implications for multimarket theory. This study is among the first to examine the role of managers within a multimarket context. We show that it is not enough for a firm to be embedded within a multimarket structure, but that for a firm to benefit from its multimarket position, its managers must be aware of this positioning and free of other influences that could cause them to behave in ways that are inconsistent with it. Because our findings show that newer CEOs can direct their firms to act in ways that are inconsistent with their firm's multimarket position, we identify an area of potential competitive vulnerability for the firm.

The Effect of Bid Rigging on Prices: A Study of the Highway Construction Industry

This paper examines the effect of multimarket contact in afirst price sealed bid government procurement auction market. It investigates whether bidprices in the highway construction industry are related to conditions that favor the formation of a cartel.Repeated contacts among firms are found to have a significantly positive effect on the winning low bidwhich leads to higher profit. Further, rivalry among few firms tends to exacerbate the multimarket effect.The results in this study additionally support the recent theoretical predictions that collusion isbetter sustainable during economic downturns.

Multimarket Contact in Banking

According to linked oligopoly theory, the anticipated effect of multimarket contact is reduced competition. Specifically, the theory predicts that contact lowers competition by reducing the benefit of aggressive action in any single market by providing rivals with the opportunity to retaliate in multiple common markets. The results of this paper are consistent with the theory. In banking, contact is positively related to profitability. Although the economic impact of this relationship is unimportant for most institutions, the relationship is meaningful for the small group of banks most heavily exposed to contact. This finding suggests that the importance of contact may rise as consolidation of the banking industry continues.