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| Author: | Hughes, K. Oughton, Ch. |
| Title: | Diversification, multi-market contact and profitability |
| Journal: | Economica
1993 : MAY, VOL. 60:238, p. 203-224 |
| Index terms: | DIVERSIFICATION PROFITABILITY UNITED KINGDOM STRATEGY |
| Language: | eng |
| Abstract: | An analysis is performed that focuses on the link between diversification and multi-market contact to show that, when diversification establishes or increases the extent to which firms meet in more than one market, the effect of such multi-market contact is to increase the possibility that collusion emerges as an evolutionary stable strategy. As a result, multi-market contact may increase the potential for tacit collusion and so lead to higher profitability. The effects of diversification and multi-market contact on the price-cost margin and the rate of return to capital are estimated using a specially constructed new database for UK manufacturing industry in 1979. |
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