Market Power and Multimarket Contact: Some Evidence from the Spanish Hotel Industry
This 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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Volume (Year): 46 (1998)
Issue (Month): 3 (September)
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