Competition in multiple geographic markets: The impact on growth and market entry

We investigate the impact of contact between organizations in multiple geog raphic markets, focusing on two competitive behaviors: growth in current ma rkets and entry into new markets. Drawing on sociological and economic theo ries, we propose that the extent of multimarket contact determines the leve l of competition experienced by a focal organization and therefore influenc es its growth and market entry. We also propose that market structure, spec ifically the extent to which markets are dominated by a few large firms, in fluences competition and therefore influences growth and market entry. Fina lly, we propose that market structure accentuates multimarket competitive d ynamics, as mutual forbearance is more pronounced in markets dominated by a few large firms. Analysis of growth and market entry by a mixed population of multi- and single-market firms in the California savings and loan indus try generally supports our model and shows that multipoint competition affe cts all rivals, multi- and single-market firms alike.