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Imminent Entry and the Transition to Multimarket Rivalry in a Laboratory Setting

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  • Charles F. Mason
  • Owen R. Phillips

Abstract

In this paper we study the behavior of rivals when there is a known probability of imminent entry. Experimental markets are used to collect data on pre‐ and postentry production when there is an announced time of possible entry; some markets experience entry and other do not. In all preentry markets competition is more intense. Postentry behavior in all markets is more competitive compared to a baseline that had no threat. There is evidence that postentry multimarket contact raises outputs in those markets that did not experience entry, behavior we generally refer to as a conduit effect.

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  • Charles F. Mason & Owen R. Phillips, 2016. "Imminent Entry and the Transition to Multimarket Rivalry in a Laboratory Setting," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(4), pages 1018-1039, December.
    • Handle: RePEc:bla:jemstr:v:25:y:2016:i:4:p:1018-1039
    DOI: 10.1111/jems.12169
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    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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