MULTIMARKET AND MULTIPROJECT COLLUSION - WHY EUROPEAN INTEGRATION MAYREDUCE INTRACOMMUNITY COMPETITION

If firms meet in a number of markets, they may respond to an action in one market by reacting in another market. Fear for such retaliation m ay induce multimarket firms to collude across markets. The paper asses ses available theoretical and empirical evidence on the multimarket co llusion theory. Moreover, the paper suggests that the theory can be fr uitfully applied in the context of European integration. The focus is on collusion by firms which meet in product markets as well as in join t R&D projects. A model develops three propositions, which shed light on the subsequently provided (tentative) evidence on multidimensional contact in an integrating Europe. The discussion may serve as a framew ork for future research into both the theoretical and the empirical do main with applications to the issue of European integration.