This paper presents a theoretical foundation to the possibility that multim
arket contact enhances firms' ability to sustain implicit collusion. When f
irms operate in a single market and cannot perfectly monitor their opponent
s choices, it is impossible to achieve efficiency even if these firms have
a Long-term strategic relationship. We show that when firms encounter each
other in a number of distinct markets and the extent of this market contact
is large, efficiency can be approximately sustained by a perfect equilibri
um. This efficiency with imperfect monitoring holds under almost the same c
ondition on the discount factor as with perfect monitoring. (C) 2001 Academ
ic Press.