Multimarket contact among diversified oligopolists
Multimarket contact appears to be necessary for effective oligopolistic consensus in a concentrated industry when the industry's firms are diversified. Evidently, without multimarket contact, coordination breaks down because the diversified sellers have different costs and demands, and hence would not independently choose the same price, and because price cuts are less easily detected and matched. The evidence suggests that Bain's seminal observation of the nexus among profits, concentration, and barriers resulted because of the multimarket contact of the firms in his sample.
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