Multimarket contact, competitive aggreeiveness and the marketing mix

Abstract

Multimarket competition theory centers in interfirm competition, specifically when a set of firms have presence and face each other as competitors in multiple different markets (Baum & Korn, 1996; Bernheim & Whinston, 1990; Gimeno, 1999; Gimeno & Woo, 1994, 1996; Haveman & Nonnemaker, 2000; Jayachandran, Gimeno, & Varadarajan, 1999). In such situation, the chances of knowing, hurting or benefiting each other increase, allowing firms to recognize their interdependence, pressing them to be cautious when deciding which competitive actions to make because the outcome of a move depends heavily on how rivals respond to it (Baum & Korn, 1996; Bernheim & Whinston, 1990; Gimeno, 1999; Haveman & Nonnemaker, 2000; Jayachandran et al., 1999). This situation pushes firms to tacitly collude and mutually forbear (Bernheim & Whinston, 1990; Edwards, 1955; Feinberg, 1985), lowering the intensity of competition understood as the level of aggressiveness and speed of the actions and counteractions firms initiate to compete in the market (Chen, 1996). According to Smith, Ferrier and Ndofor (2001),