Multipoint competition, strategic similarity and entry into geographic markets

The objective of this study is to integrate both multimarket contact and strategic similarity in the analysis of entry decisions. We also analyze the role of the reciprocity, of contacts, market concentration, and coordination mechanisms at moderating the relationship. Our hypotheses are tested through the analysis of entry, behavior into new geographical markets in the Spanish savings bank market. Interestingly, our results offer an opportunity of conciliating conflicting evidence in both the multimarket-mutual forbearance and the heterogeneity-rivalry literatures and offer further support to the U-inverted influence of multimarket contact on entry. Given the coordination assumption implicit in the theory and the possible presence of unobservable variables, we also offer a method to cope with the common-actor problem. Copyright (c) 2006 John Wiley & Sons, Ltd.