Markets linked by rising marginal costs: Implications for multimarket contact, recoupment, and retaliatory entry
Ross, Thomas W.
- 国际学院－已发表论文 
This paper studies the effects on prices and welfare of multimarket contact when firms serve multiple markets from a single facility with rising marginal costs. Here a link is created between markets, even with independent demands: greater output in one market leads to a higher marginal cost and lower output in other markets; and multimarket contact can indeed lower welfare. Variations of the model can explain two other puzzling phenomena: "recoupment" - lower prices in one market "paid for" by higher prices in other markets; and "retaliatory entry" - the credible threat to enter a rival's market if it enters yours.