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Definition: Multimarket Competition
Multimarket Competition is the situation where two firms are compete against each other in multiple markets and across different products. In this situation, due to frequent contact between the two firms across different markets – it might result in reduction in the intensity of competition. This phenomenon is called mutual forbearance.
In this condition, companies try their best to avoid a price war. It is also seen that entry deterring activities are lower when the firms compete with each other in more number of markets and intensity of competition is high at lower levels of contact.
An example of multimarket competition is airports which operate on a hub model – where different companies compete within a particular hub for passengers. Typically MMC can be observed between highly diversified conglomerates which operate across different products and segments.
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