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Multimarket contact among diversified oligopolists

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  • Scott, John T.

Abstract

Multimarket contact appears to be necessary for effective oligopolistic consensus in a concentrated industry when the industry's firms are diversified. Evidently, without multimarket contact, coordination breaks down because the diversified sellers have different costs and demands, and hence would not independently choose the same price, and because price cuts are less easily detected and matched. The evidence suggests that Bain's seminal observation of the nexus among profits, concentration, and barriers resulted because of the multimarket contact of the firms in his sample.

Suggested Citation

  • Scott, John T., 1991. "Multimarket contact among diversified oligopolists," International Journal of Industrial Organization, Elsevier, vol. 9(2), pages 225-238, June.
    • Handle: RePEc:eee:indorg:v:9:y:1991:i:2:p:225-238
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    Cited by:

    1. Pham, Tho & Talavera, Oleksandr & Yang, Junhong, 2016. "Multimarket Competition and Profitability: Evidence from Ukrainian banking," MPRA Paper 78763, University Library of Munich, Germany, revised 01 Apr 2017.
    2. Bertrand, Olivier & Ivaldi, Marc, 2006. "European Competition Policy in International Markets," IDEI Working Papers 419, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. Steven Pilloff, 1999. "Multimarket Contact in Banking," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(2), pages 163-182, March.
    4. Elizabeth L. Rose & Kiyohiko Ito, 2009. "Past Interactions and New Foreign Direct Investment Location Decisions," Management International Review, Springer, vol. 49(5), pages 641-669, October.
    5. Lucio Fuentelsaz & Jaime Gómez, "undated". "Multipoint Competition, Mutual Forbearance and Entry into Geographic Markets," Studies on the Spanish Economy 127, FEDEA.
    6. Sebastian Linde & Ralph Siebert, 2016. "Do Mergers Among Multimarket Firms Create Value?," CESifo Working Paper Series 6139, CESifo.
    7. Werner Güth & Kirsten Häger & Oliver Kirchkamp & Joachim Schwalbach, 2016. "Testing Forbearance Experimentally: Duopolistic Competition of Conglomerate Firms," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 23(1), pages 63-86, February.
    8. Ma, Wenliang & Wang, Qiang & Yang, Hangjun & Zhang, Yahua, 2020. "Is multimarket contact an antitrust concern? A case of China’s airline market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 515-526.
    9. Srabana Gupta, 2001. "The Effect of Bid Rigging on Prices: A Study of the Highway Construction Industry," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 19(4), pages 451-465, December.
    10. Paolo Coccorese & Alfonso Pellecchia, 2009. "Multimarket Contact and Profitability in Banking: Evidence from Italy," Journal of Financial Services Research, Springer;Western Finance Association, vol. 35(3), pages 245-271, June.
    11. Kathy J. Hayes & Leola B. Ross, 1996. "Is airline price dispersion the result of careful planning or competitive forces?," Working Papers 9607, Federal Reserve Bank of Dallas.
    12. Changqi Wu & K.C. Wei, 1998. "Cooperative R&D and the Value of the Firm," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 13(4), pages 425-446, August.
    13. Kathy J. Hayes & Leola B. Ross, "undated". "Is Airline Price Dispersion the Result of Careful Planning or Competitive Forces?," Working Papers 9702, East Carolina University, Department of Economics.
    14. Leola B. Ross, "undated". "When Will an Airline Stand Its Ground? An Analysis of Fare Wars," Working Papers 9703, East Carolina University, Department of Economics.
    15. Jans, Ivette & Rosenbaum, David I., 1997. "Multimarket contact and pricing: Evidence from the U.S. cement industry," International Journal of Industrial Organization, Elsevier, vol. 15(3), pages 391-412, May.

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