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Imminent entry and the transition to multimarket rivalry in a laboratory setting

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  • Mason, Charles F.
  • Phillips, Owen R.

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.

Suggested Citation

  • Mason, Charles F. & Phillips, Owen R., 2016. "Imminent entry and the transition to multimarket rivalry in a laboratory setting," LSE Research Online Documents on Economics 68888, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:68888
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    References listed on IDEAS

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    More about this item

    Keywords

    entry; rivalry; market experimentation;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies

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