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Causes and effects of multimarket activity from theory to empirical analysis

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  • Davide Vannoni

Abstract

In this paper some of the results emerged in the empirical literature on diversification are put into perspective against the background of a simple integrative model of multiproduct firms. By letting diversification strategies depend on the simultaneous play of four factors (demand relationships and technological links between goods, collusion within a market and across markets), the latter provides an illustrative framework which is useful to discuss how effectively the issue of ambiguous findings has been tackled in applied works. In some cases scholars have devoted substantial effort in order to build tests which can successfully discriminate among the different views on the causes and effects of diversification, while in other circumstances empirical investigations have been conducted with much less care. Other then criticising some of the methods used in the past, the paper provides a number of suggestions that can help guiding future empirical work on corporate diversification. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Davide Vannoni, 2004. "Causes and effects of multimarket activity from theory to empirical analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(3), pages 163-174.
    • Handle: RePEc:wly:mgtdec:v:25:y:2004:i:3:p:163-174
    DOI: 10.1002/mde.1143
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    References listed on IDEAS

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    1. Feinberg, Robert M., 1984. "Mutual forbearance as an extension of oligopoly theory," Journal of Economics and Business, Elsevier, vol. 36(2), pages 243-249, May.
    2. Scott,John T., 2005. "Purposive Diversification and Economic Performance," Cambridge Books, Cambridge University Press, number 9780521022583, September.
    3. Nerea Fernández & Pedro L. Marín, 1998. "Market Power and Multimarket Contact: Some Evidence from the Spanish Hotel Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 46(3), pages 301-315, September.
    4. Lichtenberg, Frank R., 1992. "Industrial de-diversification and its consequences for productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 18(3), pages 427-438, August.
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    6. Spagnolo, Giancarlo, 1999. "On Interdependent Supergames: Multimarket Contact, Concavity, and Collusion," Journal of Economic Theory, Elsevier, vol. 89(1), pages 127-139, November.
    7. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
    8. Corwin D. Edwards, 1955. "Conglomerate Bigness as a Source of Power," NBER Chapters, in: Business Concentration and Price Policy, pages 331-359, National Bureau of Economic Research, Inc.
    9. repec:bla:jindec:v:46:y:1998:i:3:p:301-15 is not listed on IDEAS
    10. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, April.
    11. Davide Vannoni, 1999. "Empirical Studies on Corporate Diversification," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 107-136.
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    Cited by:

    1. E. Santarelli & H. T. Tran, 2013. "Diversification Strategies and Firm Performance: A Sample Selection Approach," Working Papers wp896, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Enrico Santarelli & Hien Thu Tran, 2016. "Diversification strategies and firm performance in Vietnam," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(1), pages 31-68, January.

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