Market Power and Multimarket Contact: Some Evidence from the Spanish Hotel Industry
AbstractThis paper analyzes the effect of multimarket contact on firms' behavior. According to D. Bernheim and M. D. Whinston (1990), firms that meet in several markets for an infinite number of periods may find it profitable to redistribute market power among markets where they are operating. The authors present evidence supporting this prediction by using data from the Spanish hotel industry. Moreover, they also find that the omission of variables measuring multimarket contact creates a downward bias on the effect of concentration on prices. This result questions previous conclusions about the role of competition in industries where multimarket behavior is expected. Copyright 1998 by Blackwell Publishing Ltd
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Industrial Economics.
Volume (Year): 46 (1998)
Issue (Month): 3 (September)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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- Timothy L. Sorenson, 2007. "Credible collusion in multimarket oligopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 115-128.
- Paolo Coccorese & Alfonso Pellecchia, 2009. "Multimarket Contact and Profitability in Banking: Evidence from Italy," Journal of Financial Services Research, Springer, vol. 35(3), pages 245-271, June.
- Ciliberto, Federico & Williams, Jonathan, 2010. "Does Multimarket Contact Facilitate Tacit Collusion? Inference on Conjectural Parameters in the Airline Industry," MPRA Paper 24888, University Library of Munich, Germany.
- Juan-Pablo Montero & Esperanza Johnson, 2012. "Multimarket Contact, Bundling and Collusive Behavior," Documentos de Trabajo 420, Instituto de Economia. Pontificia Universidad Católica de Chile..
- Arturs Kalnins, 2006. "Markets: The U.S. Lodging Industry," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 203-218, Fall.
- Volodymyr Bilotkach, 2011. "Multimarket Contact and Intensity of Competition: Evidence from an Airline Merger," Review of Industrial Organization, Springer, vol. 38(1), pages 95-115, January.
- Fu, W. Wayne, 2003. "Multimarket contact of US newspaper chains: circulation competition and market coordination," Information Economics and Policy, Elsevier, vol. 15(4), pages 501-519, December.
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