Multimarket contact
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Multimarket contact occurs when firms meet the same rivals in multiple markets. When firms compete with each other in more than one market their competitive behavior may differ from that of single-market rivals. Multimarket competition may result in the reduction of the competitive intensity among rivals, an effect known as mutual forbearance.
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 in other markets.
References
- Gimeno, Javier; Woo, Carolyn (1999). "Multimarket contact, economies of scope, and firm performance". Academy of Management Journal. 43 (3). The Academy of Management Journal, Vol. 42, No. 3: 239–259. doi:10.2307/256917. JSTOR 256917.
- Yu, Tieying; Cannella, Alberta (2007). "Rivalry between multinational enterprises: an event history approach". Academy of Management Journal. 50 (3): 665–686. doi:10.2307/20159878.