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The performance effects of unintended and purposive multimarket contact
Author(s) -
Gimeno Javier
Publication year - 2002
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1062
Subject(s) - forbearance , competitor analysis , unintended consequences , microeconomics , industrial organization , business , economics , marketing , political science , finance , law
Multimarket contact may arise from unintended encounters among competitors pursuing uncoordinated market expansion strategies, as well as from the strategic intent of firms seeking mutual forbearance with their rivals. Are the performance effects of unintended multimarket contacts different from those of purposeful contacts? Results in the US airline industry indicate that they are not. Multimarket contacts have a constant marginal effect on margins regardless of whether they occur at a level below or above the level that would be expected just by chance. In this case, the performance effect of multimarket contact is determined by the realized strategy, regardless of whether it was deliberate or emergent. Implications for other areas of strategy research are discussed. Copyright © 2002 John Wiley & Sons, Ltd.