Beyond multimarket contact to mutual forbearance: Pursuit of multimarket strategy

In this paper we differentiate between the creation and subsequent exploitation of multimarket contact. We examine specific factors that influence the likelihood that a firm will seek to develop a purposive set of overlapping markets with specific competitors, as opposed to developing naive contacts based on an internally derived logic. We suggest that competitor identification, organization structure, ease of competitive response and industry structure (including the presence of network externalities, barriers to entry, and industry growth rate) all play important roles in determining the ability of managers to seek rivalry-reduction that has been found to follow the development of market overlap. We offer several propositions that serve to define the boundaries of research into mutual forbearance and multimarket competition, and that may help to explain empirical results obtained to date.