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Divisional Multimarket Contact Within And Between Multiunit Organizations, Arturs Kalnins

Arturs Kalnins

The theory of multimarket contact has important but uninvestigated implications for interactions among a firm's divisions because divisions often meet and even compete in multiple geographical and product markets. I hypothesize that firms with incentives to induce competition among divisions will act to reduce levels of multimarket contact among those divisions. Further, I predict that, in markets with substantial uncertainty, firms will increase divisional multimarket contact. I find support for these hypotheses in the setting of the franchised fast-food industry.