Multimarket contact occurs when
firms compete with the same rivals in multiple markets. When firms compete with each other in more than one
market
Market is a term used to describe concepts such as:
*Market (economics), system in which parties engage in transactions according to supply and demand
*Market economy
*Marketplace, a physical marketplace or public market
Geography
*Märket, an ...
, their
competitive behavior may differ from that of single-market rivals. Multimarket contact gives a firm the option to respond to actions or attacks by a rival not only in the market being challenged, but also in other markets where they both compete. As a result, multimarket competitors may hesitate to attack in one market for fear of
retaliation
Revenge is committing a harmful action against a person or group in response to a grievance, be it real or perceived. Francis Bacon described revenge as a kind of "wild justice" that "does... offend the law ndputteth the law out of office." Pr ...
in other markets. Multimarket competition may therefore reduce the competitive intensity among rivals, an effect known as mutual forbearance.
References
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* {{cite journal , last=Yu , first=Tieying , author2=Cannella, Alberta , year=2007 , title=Rivalry between multinational enterprises: an event history approach , journal=Academy of Management Journal , volume=50 , issue=3 , pages=665–686 , doi=10.5465/amj.2007.25527425, jstor=20159878
Competition (economics)